Sponsored by TCI International Inc.
28 Jul 23. Leonardo Joins Board of Cargo Drone Startup FlyingBasket. Leonardo, an international company in the defense, aerospace and security sectors, has completed in recent days-through the exercise of an option stipulated in 2021 and linked to the achievement of pre-established objectives-its entry into FlyingBasket‘s capital and the appointment of a member to the Board of Directors by co-option.
As a result of this transaction, Leonardo will go on to hold about 10 percent of the company, with about 25 percent held by Cysero – a venture capital fund promoted by AVM Gestioni SGR and Kilometro Rosso, which invested directly in the company in March 2022 – and the remaining 65 percent divided among the founders and managers of the company, which was born from the genius of brothers Moritz and Matthias Moroder.
Taking advantage of the dynamics of a constantly expanding sector and leveraging a very strong capacity for innovation, FlyingBasket has succeeded in just a few years in establishing itself on the market as a reality of excellence, as demonstrated by the agreements signed with Enel and Cablex (Swisscom group), along with the applications developed in the field of renewables, particularly for wind power, and participation in important tenders in the logistics and defense fields.
The interest of Leonardo – which after selecting FlyingBasket as preferred supplier will now make available infrastructure and technological assets to the investee – is linked to the role FlyingBasket could play in the future national logistics network, based on the use of cargo drones. In addition, the multinational company’s entry into the capital will, thanks in part to its direct involvement in governance, further the company’s growth path already started with the contribution of the Cysero fund.
We immediately believed in FlyingBasket, supporting its growth path and providing our contribution not only as a financial partner but also as a reliable partner for the structuring of business processes,“ comments Giovanna Dossena – CEO of AVM Gestioni SGR.
The Cysero fund has defined together with the management the growth strategy, strengthened the corporate finance levers and introduced management, governance and control mechanisms capable of a stable and deep presidium oriented to principles of transparency, sustainability and positive impact on the economic and social context. Today, the entry of Leonardo opens new horizons of experimentation, competition and development for the company.”
“The entry of Leonardo S.p.A. consolidates a relationship already developed over the years in which the know-how and network available to the company has enabled FlyingBasket’s growth,” emphasizes Moritz Moroder, CEO of FlyingBasket. “The path started will see further developments thanks to this initiative and confirms the interest of investors and industrial stakeholders in the project created in 2015 that aims to bring our innovative solutions to Italy and Europe to promote the values of sustainability and accessibility in the air transport sector.”
Leonardo’s decision to enter the company’s capital is the best confirmation of the absolute excellence at the European level of FlyingBasket’s product and team,” adds Luca Todesco, FlyingBasket board member, who oversaw the Leonardo S.p.A. entry transaction on behalf of Cysero. “We are eager to start working with the people at Leonardo to further accelerate the growth of FlyingBasket.”
“We are very pleased with this important milestone for FlyingBasket” – comments Salvatore Majorana, Director of Kilometro Rosso – “which rewards the ability to team up and pool the best energies. In this spirit, the work of the Cysero team and its ability to dialogue with the business community is a resource for the development of the fund’s investees.“ AVM Gestioni SGR
AVM Group has been operating in the private equity and venture capital sectors since 1995 with a network of Italian entrepreneurs and institutional investors.
Avm’s investment teams are specialized and dedicated to the development of Italian SMEs to realize their growth potential through aggregations with a view to medium- to long-term strategies.
AVM invests with dedicated funds in the Life Essentials (Food & Beverage, Health & Beauty, Domotics), robotics and cybersecurity, and impact finance sectors.
Giovanna Dossena is founder and CEO of AVM Gestioni. Kilometro Rosso
Kilometro Rosso is one of Europe’s leading innovation districts, a campus that is now home to 80 Resident Partners – companies, laboratories and research centers -, with a total of 2,500 employees and researchers. Developed on a private initiative, the Technology Park has been operating since 2009 with an inclusive and collaborative logic between the business system, the university, the territory and institutional references, with the mission of fostering and supporting innovation processes in the manufacturing system. To this end, it has built a system of competencies in the areas of Robotics, Cybersecurity, AI, materials science, additive manufacturing, mechatronics, life sciences and environmental impact that have led to the development of 37 laboratories, R&D projects worth more than 170m euros, 750 patents filed, and an intense dissemination activity that reaches thousands of people each year.<
Alberto Bombassei is the Chairman, Salvatore Majorana is the Director.
FlyingBasket is an Italian company based in Bolzano, Italy, specializing in the design and production of cargo drones, with a payload capacity of 100 kg. The start-up was founded in 2015 and since its inception has become the benchmark in the commercial cargo drone industry.
FlyingBasket provides drone lifting and transportation services in the sectors: logistics, energy, telecommunications and others.
(Source: UAS VISION)
28 Jul 23. Textron Reports Second Quarter 2023 Results; Raises Full-Year EPS Outlook.
- EPS of $1.30; adjusted EPS of $1.46, up 32% from a year ago
- Net cash from operating activities of $314m in the second quarter of 2023
- $273m returned to shareholders through share repurchases in the second quarter
- Full-year adjusted EPS outlook raised to $5.20 – $5.30
Textron Inc. (NYSE: TXT) today reported second quarter 2023 income from continuing operations of $1.30 per share, as compared to $1.00 per share in the second quarter of 2022. Adjusted income from continuing operations, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $1.46 per share for the second quarter of 2023, compared to $1.11 per share in the second quarter of 2022.
“During the second quarter, revenue grew 8.6% year over year with higher revenues in all our segments,” said Textron Chairman and CEO, Scott C. Donnelly. “Operationally, execution was strong across our segments with a segment profit margin of 10.3% in the second quarter of 2023, up 140 basis points from last year’s second quarter.”
Net cash provided by operating activities of the manufacturing group for the second quarter was $314m, compared to $364m last year. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $242m for the second quarter, compared to $309 m last year.
In the quarter, Textron returned $273m to shareholders through share repurchases. Year to date, Textron has returned $650m to shareholders through share repurchases.
Share Repurchase Program
On July 24, 2023, Textron’s Board of Directors approved a new authorization for the repurchase of up to 35m shares, under which the company intends to purchase shares to offset the impact of dilution from stock-based compensation and benefit plans and for opportunistic capital management purposes.
Textron now expects 2023 adjusted earnings per share from continuing operations to be in a range of $5.20 to $5.30, up from our previous outlook of $5.00 to $5.20. Textron reiterated its expectation for cash flow from continuing operations of the manufacturing group before pension contributions of $0.9bn to $1.0bn with planned pension contributions of about $50m.
Second Quarter Segment Results
Textron Aviation’s revenues were $1.4bn, up $78m from last year’s second quarter, reflecting higher pricing of $95m, partially offset by lower volume and mix.
Textron Aviation delivered 44 jets in the quarter, down from 48 last year, and 37 commercial turboprops, up from 35 in last year’s second quarter.
Segment profit was $171m in the second quarter, up $22m from a year ago, largely due to favorable pricing, net of inflation, of $52m, partially offset by an unfavorable impact from performance of $23m. Performance included unfavorable manufacturing performance, largely related to supply chain and labor inefficiencies.
Textron Aviation backlog at the end of the second quarter was $6.8 bn.
Bell revenues in the quarter were $701m, up $14m from the second quarter of 2022, due to higher pricing of $2 m, partially offset by lower military volume of $7m.
Bell delivered 35 commercial helicopters in the quarter, up from 34 last year.
Segment profit of $65m was up $11m from last year’s second quarter, due to a favorable impact from performance of $13m, largely reflecting lower research and development costs, and a favorable impact from pricing, net of inflation, of $9m, partially offset by lower volume and mix.
Bell backlog at the end of the second quarter was $5.6bn.
Revenues at Textron Systems were $306m, up $13m from last year’s second quarter, largely reflecting higher volume.
Segment profit of $37m was down $1m, compared with the second quarter of 2022.
Textron Systems’ backlog at the end of the second quarter was $1.9bn.
Industrial revenues were $1.0bn, up $155m from last year’s second quarter, largely due to higher volume and mix at both Kautex and Textron Specialized Vehicles of $121m and a $37 m favorable impact from pricing.
Segment profit of $79 m was up $42 m from the second quarter of 2022, primarily due to higher volume and mix of $32 m, and a favorable impact from pricing, net of inflation, of $17 m, principally at Kautex, partially offset by an unfavorable impact of $10 m from performance.
Textron eAviation segment revenues were $11m and segment loss was $12m in the second quarter of 2023, primarily related to research and development costs.
Finance segment revenues were $18m, and profit was $12m.
(Source: BUSINESS WIRE)
28 Jul 23. HENSOLDT increases order intake and profitability in the first half of 2023.
- Order intake of EUR 1,071m in the first half of the year
- New record order backlog of EUR 5,671m
- Revenue up 6.4% at EUR 726m in the first half of 2023
- Adjusted EBITDA improves by 34.7% to EUR 82m
- Adjusted EBITDA margin rises to 11.3% (previous year: 8.9%)
- Guidance for the 2023 financial year confirmed; full-year revenue forecast specified at approximately EUR 1,850m
The HENSOLDT Group (“HENSOLDT”) further strengthened its position as a leading company in the European defence industry with global reach during the first half of 2023. The company’s revenue in this period increased by 6.4% to EUR 726 m (H1 2022: EUR 682m). Driven mainly by increased revenue growth, combined with an increase in costs that was slower than the revenue growth, adjusted EBITDA grew by a significant 34.7% to EUR 82m (previous year: EUR 61m). The adjusted EBITDA margin improved to 11.3% (H1 2022 year: 8.9%).
Order intake in the first half of 2023 was EUR 1,071m and therefore remained at a very high level (previous year: EUR 948m). The continued overall positive business performance is underpinned by both segments, Sensors and Optronics, and driven by the demand for TRML-4D radars as well as sensor and self-protection systems for the Puma and Leopard 2, among other things.
In light of its positive net income in the first half of 2023, HENSOLDT is confirming its short- and medium-term guidance and specifies its expected full-year revenue for 2023 at approximately EUR 1,850m.
Thomas Müller, CEO of the HENSOLDT Group, says: “In times when the global order is disturbed by Russia’s war against Ukraine, HENSOLDT remains an important guarantor of a successful Zeitenwende. With our sustained positive business performance in the first half of 2023, we are demonstrating once more that we meet the high expectations placed on us as a technology leader for defence and security applications. For example, we successfully recorded multiple orders for TRML-4D radars for the IRIS-T-SLM air defence system as well as in direct sales during the first six months of 2023. Key programs such as PEGASUS remain on track, too. We have an excellent strategic foundation, and we have the right solutions to respond to the enormous increase in demand for defence and security solutions, particularly in the fields of reconnaissance, electronic warfare and self-protection.”
Christian Ladurner, CFO of the HENSOLDT Group, says: “At HENSOLDT, the increased need for security in Germany, Europe and the world is met with innovative defence and security technologies. This is reflected in the dynamism of our KPIs: We realized an order intake of over EUR 1 bn. Simultaneously, we improved revenue from our core business significantly and leveraged economies of scale from ramping-up production of our key products to increase our profitability further. We are more than confident that we will be able to build on the highly successful 2022 financial year as a result.”
Strong growth in order intake
With a volume of EUR 1,071m, the order intake in the first six months of the current financial year exceeded the already high level of EUR 948 m attained in the same period of the previous year. In particular, the main drivers in the Sensors segment were orders for TMRL-4D radars destined for supporting Ukraine and for the Bundeswehr, as well as an order for the Multifunction Self Protection System (MUSS) destined for the Bundeswehr’s Puma infantry fighting vehicle. The Optronics segment was also able to raise its order intake year over year. This is mainly attributable to orders received for the Puma and Leopard 2 platforms as well as an order for Norwegian Ula-class submarines.
Positive developments in revenue, profitability and free cash flow
The HENSOLDT Group’s revenue has risen to EUR 726m (previous year: EUR 682m). Included in this is a 17% year-over-year increase in revenue from core business. The key revenue drivers included the major PEGASUS and Eurofighter radar projects as well as TRML-4D radars, among other things. Adjusted EBITDA increased to EUR 82 m (previous year: EUR 61m) and the EBITDA margin of 11.3% exceeded the 8.9% attained for the same period the previous year. The adjusted free cash flow before taxes and interest has improved year over year at EUR –136m (previous year: EUR –157m).
Guidance for 2023 financial year confirmed
For the 2023 financial year, HENSOLDT is expecting further positive business performance and anticipates moderate growth in its order intake due to budget increases and further contracts from the German federal government’s special fund. On account of the still-large order backlog in particular, the company is also expecting moderate organic revenue growth to approximately EUR 1,850 m for the 2023 financial year as well as a similarly moderate increase in adjusted EBITDA.
27 Jul 23. KBR Announces Second Quarter 2023 Financial Results. KBR, Inc. (NYSE: KBR) today announced its second quarter 2023 financial results and raised its FY 2023 financial guidance for Adjusted EBITDA2.
“Once again, the people of KBR have delivered a strong quarter of financial and ESG performance, underpinned by our mission focus and exemplary operational discipline,” said Stuart Bradie, KBR president and CEO. “Revenue and cash flow were strong in the first half of 2023. Net income was negatively impacted due to recorded losses in the second quarter associated with our convertible notes and the settlement of a legacy legal matter. First half Adjusted EBITDA2 and Adjusted EPS2 were outstanding, and as a result of strong, core business performance, we are pleased to announce an increase in our FY 2023 Adjusted EBITDA2 guidance. In response to our ongoing ESG progress, we received a AAA designation in MSCI’s 2023 ESG Ratings, we were named one of America’s Climate Leaders 2023 by USA Today, and we received a gold medal rating from EcoVadis in recognition of our sustainability achievements, ranking KBR among the top 5% of assessed companies.”
“Furthermore, we were pleased to announce the resolution of a legacy legal matter and the repurchase of $100m in convertible notes and associated warrants. We anticipate these developments will help us reduce uncertainty and liquidity risk and open the door for opportunities for shareholder value appreciation as we continue to build on our strong momentum this year and the years to come.”
New Business Awards
Backlog and options as of June 30, 2023 totaled $21.1bn. Delivered 1.1x trailing-twelve-months (TTM) book-to-bill1 as of June 30, 2023. Awarded $2.2bn of bookings and options in the quarter.
Sustainable Technology Solutions (STS) delivered 1.4x TTM book-to-bill as of June 30, 2023, including awards and achievements in the quarter as follows:
- Selected by Avina Clean Hydrogen to use KBR’s K-GreeN® technology for its green ammonia project in the U.S.
- Signed a memorandum of understanding with Atlas Agro AG to license KBR’s innovative K-GreeN® technology for Atlas’ planned investment in a series of green nitrate plants.
- Signed a joint development agreement with ISU Chemical Co. Ltd. for the design of a commercial scale lithium sulfide unit for next generation battery technology.
- Awarded an engineering and design services contract from The Chemours Company to increase capacity and advance technology for its industry-leading Nafion™ exchange materials platform.
- Awarded a contract by Hindustan Petroleum Corporation Limited to implement KBR’s market-leading supercritical solvent deasphalting technology, ROSE®, at a refinery in Mumbai.
- Signed a feasibility study contract by Southern Rock Energy Partners to support the development of a first-of-its-kind refinery in Cushing, Oklahoma.
- Announced a new fully integrated and flexible Autothermal Reforming (ATR) technology solution for the production of low carbon ammonia at mega scale.
Government Solutions (GS) delivered 0.9x TTM book-to-bill1 as of June 30, 2023, including awards and achievements in the quarter as follows:
- Awarded a significant contract, Integrated Missions Operations Contract III, worth up to $1.9bn for the continued support of NASA’s human spaceflight programs, including the International Space Station, Artemis and Low Earth Orbit Commercialization. This has not yet been booked into backlog.
- Awarded a contract up to $69 m to provide mission-critical labor at three locations in the U.S. Central Command area of operations through the Air Force Contract Augmentation Program.
- U.S. Small Business Administration awarded KBR’s Science and Space division the Dwight D. Eisenhower Award for Excellence in research and development.
- Expanded base operations support services in the Indo-Pacific region with a $24m task award contract by the 94th Army Air and Missile Defense Command for support of two key communications sites in Japan.
- Announced that it is a subcontractor to McCallie Associates, Inc., a certified small business selected to provide mission and instrument systems engineering services at NASA’s Goddard Space Flight Center in Maryland and Wallops Flight Facility in Virginia.
- Awarded several other contracts in Science & Space and Defense & Intel that have not been booked into backlog due to ongoing protest.
KBR recently published its 2022 Sustainability Report and received the following awards and achievements in the quarter:
- Received a AAA designation in MSCI’s 2023 ESG (environmental, social and governance) Ratings. The AAA rating is MSCI’s highest and is given to companies that are leading their industries in managing the most significant ESG risks and opportunities.
- Recognized by USA Today as one of America’s Climate Leaders for 2023. This data-driven recognition ranks U.S.-based companies that have cut their carbon footprint in recent years.
- Earned a Gold Rating from EcoVadis, one of the world’s largest and most trusted providers of business sustainability ratings for global supply chains. The Gold Rating places KBR in the top 5% of assessed companies.
Summarized Second Quarter Fiscal 2023 Financial Results
Financial Highlights for the Three Months Ended June 30, 2023
- Revenue of $1.8bn, up 11% on an ex-OAW2 year-over-year-basis
- Net income attributable to KBR of $(351)m; Adjusted EBITDA2 of $191m (11% Adjusted EBITDA2 margin)
- Diluted EPS of $(2.60); Adjusted EPS2 of $0.74
- Operating cash flows of $253m
- Bookings and options of $2.2bn during the quarter with 1.1x TTM book-to-bill1
Financial Highlights for the Six Months Ended June 30, 2023
- Revenue of $3.5bn, up 14% on an ex-OAW2 year-over-year-basis
- Net income attributable to KBR of $(265) m; Adjusted EBITDA2 of $373m (11% Adjusted EBITDA2 margin)
- Diluted EPS of $(1.95); Adjusted EPS2 of $1.41
- Operating cash flows of $288m
- Bookings and options of $5.3bn during the year to date period with 1.1x TTM book-to-bill1
Commentary on the Three Months Ended June 30, 2023
Revenues were $1.8bn, up 8% compared to 2Q’22. Revenue ex-OAW2 increased $173m, or 11%, primarily attributable to increased activity to support exercises, training and other activities in the European Command, on-contract growth in Science & Space and Defense, and growing demand in Sustainable Technology Solutions primarily from engineering and professional services and technology licensing.
Net income attributable to KBR was $(351)m, down $445m compared to 2Q’22, primarily due to a cash charge of $144m in connection with the settlement of a legacy legal matter and a non-cash charge of $314m recorded in connection with the accounting treatment resulting from an election to settle our convertible notes in cash upon maturity, the repurchase of a portion of our convertible notes and the termination of corresponding portions of the note hedge and warrants (discussed below) in the current quarter.
Adjusted EBITDA2 was $191m, up 3% compared to 2Q’22, with Adjusted EBITDA2 margins of 11%. Adjusted EBITDA ex-Gains2 was up 16% compared to 2Q’22.
Diluted earnings per share decreased in line with the decrease in net income attributable to KBR. Adjusted earnings per share2 increased due to increases in gross profit and equity in earnings from unconsolidated affiliates partially offset by increases in selling, general and administrative expenses and interest expense.
Operating cash flows were $253m, up 102% compared to 2Q’22, due to revenue growth and recovery of timing items from prior quarter.
Capital returned to shareholders totaled $95m during the quarter, consisting of $76m in share repurchases, inclusive of $75 m of open market repurchases and $1m of repurchases to satisfy requirements of equity compensation plans, and $19m in regular dividends.
Commentary on the Six Months Ended June 30, 2023
Revenues were $3.5bn, up 4% compared to YTD 2Q’22. Revenue ex-OAW2 increased $431m, or 14%, primarily attributable to increased activity to support exercises, training and other activities in the European Command, on-contract growth in Science & Space and Defense, and growing demand in Sustainable Technology Solutions primarily from engineering and professional services and technology licensing.
Net income attributable to KBR was $(265)m, down $288m compared to YTD 2Q’22. Excluding the non-cash charge of $314m related to the convertible notes settlement method election and partial repurchase and partial unwind agreements in the current quarter (discussed below), Adjusted net income attributable to KBR2 was $49m, up $26m, due to higher gross profit partially offset by higher selling, general and administrative expenses and interest expense, as well as prior year gains on sale of non-core assets and unrealized gain on investments that did not recur in the current year.
Adjusted EBITDA2 was $373m, up 10% compared to YTD 2Q’22, with Adjusted EBITDA2 margins of 11%. Adjusted EBITDA ex-Gains2 was up 17% compared to YTD 2Q’22.
Diluted earnings per share decreased in line with the decrease in net income attributable to KBR. Adjusted earnings per share2 increased due to increases in gross profit and equity in earnings from unconsolidated affiliates partially offset by increases in selling, general and administrative expenses and interest expense.
Operating cash flows were $288m, up 35% compared to YTD 2Q’22.
Capital returned to shareholders totaled $172 m during the year to date period, consisting of $137m in share repurchases, inclusive of $125 m of open market repurchases and $12m of repurchases to satisfy requirements of equity compensation plans, and $35m in regular dividends.
Cash Settlement Method Election and Repurchase of Convertible Notes
During the quarter, KBR made an irrevocable election to use cash as the settlement method (as opposed to shares or a combination of cash and shares) to settle the principal and any excess value upon early conversion or maturity of the $350m principal amount of convertible notes due November 2023. This election triggered a change in accounting treatment for both the convertible notes and the related note hedge. Previously these instruments qualified for an equity exemption under ASC 815 Derivatives and Hedging because share settlement was an available option. However, as of the date of the cash settlement election, the convertible notes and the related hedge no longer qualified for this exemption, and as a result, the conversion option of the convertible notes and the note hedge required fair value measurement on the date of such election.
Additionally, during the quarter, we entered into privately-negotiated transactions to repurchase $100m in principal amount of the outstanding convertible notes, as well as the partial unwind agreements to terminate the corresponding portions of the note hedge and warrants.
As a result of the above cash settlement method election and partial repurchase, we recorded a $302m loss composed of a $104m loss on derivative bifurcation, a $70m loss on debt extinguishment, and a $128m charge related to the accretion of convertible notes debt discount. Additionally, as a result of the partial unwind agreements, we recorded a $12 m loss on settlement of warrants. These amounts, totaling $314m, are recorded within “Charges associated with Convertible Notes” on our Condensed Consolidated Statement of Operations. Refer to Note 18 “Cash Election and Repurchase of Convertible Notes” in our Form 10-Q for the quarter ended June 30, 2023 for further details.
The impact of the accounting treatment does not change the economics or expected cash outflows or inflows associated with the convertible notes, note hedge or warrants.
Other Deployment Matters
During the quarter, KBR settled a legacy legal matter pending in federal court. Under the terms of the settlement, KBR denies any liability or wrongful conduct. As a result of the settlement, a charge of $144m was recorded in operating income in the current quarter. Payment of the settlement amount occurred in July 2023.
The company does not provide reconciliations of Adjusted EBITDA, Adjusted EPS, or Adjusted operating cash flows to the most comparable GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, and acquisition-related expenses without unreasonable effort, which could be material to the company’s results computed in accordance with GAAP.
27 Jul 23. Northrop Grumman lifts annual forecasts, passes on fighter jet competition. Northrop Grumman (NOC.N) raised its full-year profit and revenue forecasts on Thursday, but shares slid when the company said it would not compete as a prime contractor for the U.S. Air Forces’ sixth-generation fighter jet.
Shares were down 4.2% during trading in New York.
Northrop, Lockheed Martin Corp (LMT.N) and Boeing Co (BA.N) were expected to compete as prime contractors for the Next Generation Air Dominance (NGAD) program, which will replace Lockheed’s F-22 Raptor with a fighter built to battle alongside drones.
“We have notified the U.S. Air Force that we’re not planning to respond to the NGAD RFP as a prime,” Northrop Chief Executive Kathy Warden told investors on a post earnings conference call.
Despite side-stepping the new fighter jet competition Northrop said the war in Ukraine and tensions in the Indo-Pacific have compelled countries in these regions to ramp up their military spending.
“There is strong demand across Europe,” Dave Keffer Northrop’s CFO told Reuters in an interview. “We had eight potential new customers come in for a demonstration of our IBCS capabilities – our integrated battle management system – that has been in very high demand.”
Munitions and missile defenses were two other high-demand areas Keffer highlighted.
European demand for U.S. weaponry is soaring, but instead of big-ticket items like jets and tanks, shopping lists are focused on cheaper, less-sophisticated items such as shoulder-fired missiles, artillery, and drones that have proven critical to Ukraine’s war efforts.
Northrop’s aeronautic systems business, which houses its new B21 Raider jet program, posted a 2% rise in sales at $2.60 billion in the second quarter.
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Sales in its space system business, which makes satellites and payloads, jumped 17% to $3.49 billion, helped by a surge in investment for space exploration projects.
Northrop raised the lower end of its annual profit forecast from $22.25 per share. It now expects 2023 profit to be in the range of $22.45 to $22.85 per share.
The company also raised its annual sales outlook to between $38.4 billion and $38.8 billion, compared with its previous projection of $38 billion to $38.4 billion.
Its net earnings came in at $812 million, or $5.34 per share, in the three months ended June 30, compared with $6.06 a year earlier.
Northrop’s overall sales in the quarter rose 9% to $9.57 billion. (Source: Reuters)
27 Jul 23. Northrop Grumman Reports Second Quarter 2023 Financial Results.
- Net Awards of $10.9bn; book to bill of 1.14
- Sales increased 9 percent to $9.6bn
- Diluted earnings per share of $5.34
- Operating cash flow of $919m
- Company increases 2023 sales guidance by $400 m and low end of EPS guidance range by $0.20
Northrop Grumman Corporation (NYSE: NOC) reported second quarter 2023 sales increased 9 percent to $9.6bn, as compared with $8.8bn in the second quarter of 2022. Second quarter 2023 sales reflect continued strong demand and improving labor availability and supplier deliveries. Second quarter 2023 net earnings totaled $812m, or $5.34 per diluted share, as compared with $946m, or $6.06 per diluted share, in the second quarter of 2022. Net earnings were reduced by $160m, or $1.01 per diluted share, as a result of lower net FAS/CAS pension income.
“Strong global demand for our products, increased supply chain deliveries and our continued success in hiring and retaining talent drove second quarter growth of nine percent,” said Kathy Warden, chair, chief executive officer and president. “With backlog more than double annual sales and a robust U.S. and international outlook for our programs, we have increased our full year sales guidance by $400m. We are driving affordability measures to partially offset the impacts of inflation for our customers and we expect margins to expand as macroeconomic headwinds stabilize and we shift our portfolio to more production and international volume.”
Second quarter 2023 sales increased $775m, or 9 percent, due to higher sales at all four sectors. Second quarter 2023 sales reflect continued strong demand and improving labor availability and supplier deliveries. Operating Income and Margin Rate Second quarter 2023 operating income increased $13m, or 1 percent, due to a reduction in the FAS/CAS operating adjustment, partially offset by lower segment operating income.
Second quarter 2023 operating margin rate declined to 10.1 percent due to a lower segment operating margin rate, partially offset by the lower FAS/CAS operating adjustment.
Segment Operating Income and Margin Rate Second quarter 2023 segment operating income decreased $21m, or 2 percent. Higher sales were more than offset by a lower segment operating margin rate, which reflects a $36 m unfavorable estimate-at-completion (EAC) adjustment on the Habitation and Logistics Outpost (HALO) program at Space Systems.
In addition, the prior year period includes a $38m gain on a property sale at Aeronautics Systems and a $33m benefit recognized in connection with a contract-related legal matter at Mission Systems. Federal and Foreign Income Taxes
The second quarter 2023 effective tax rate (ETR) of 17.7 percent was comparable with the prior year period and reflects higher interest expense on unrecognized tax benefits, offset by favorable returns on tax-exempt marketable securities.
Net Earnings and Diluted EPS Second quarter 2023 net earnings decreased $134m, or 14 percent, primarily due to a $244m reduction in the non-operating FAS pension benefit, partially offset by a $51m increase in returns on marketable securities related to our non-qualified benefit plans, higher operating income, higher interest income on short-term investments and lower income tax expense. Second quarter 2023 diluted earnings per share decreased 12 percent, reflecting a 14 percent decrease in net earnings and a 2 percent reduction in weighted-average diluted shares outstanding.
Second quarter 2023 net cash provided by operating activities was $919m compared to net cash used in operating activities of $197m in the prior year period and reflects improved trade working capital largely driven by increased billings and cash collections.
Second quarter 2023 adjusted free cash flow increased $1.1bn due to higher net cash provided by operating activities, partially offset by an increase in capital expenditures. Awards and Backlog Second quarter and year to date 2023 net awards totaled $10.9bn and $18.9bn, respectively, and backlog totaled $78.8bn.
Significant second quarter new awards include $5.4bn for restricted programs (primarily at Space Systems, Aeronautics Systems and Mission Systems), $0.6bn for F-35 (primarily at Aeronautics Systems and Mission Systems), $0.3bn for the Missile Defense Agency’s Ballistic Missile Defense System Overhead Persistent Infrared Architecture (BOA) and $0.3bn for Virginia-Class submarines.
Segment Operating Results
Three Months Ended June 30
Second quarter 2023 sales increased $61m, or 2 percent, due to higher volume in both Manned Aircraft and Autonomous Systems. Higher sales on restricted programs were partially offset by lower volume on E-2 and F/A-18, as well as the Joint Surveillance and Target Attack Radar System (JSTARS) program as it nears completion. Operating Income Second quarter 2023 operating income increased $20m, or 8 percent, due to higher sales and a higher operating margin rate.
Operating margin rate increased to 10.7 percent from 10.2 percent primarily due to higher net favorable EAC adjustments on restricted work, partially offset by a $38m gain on a property sale in the prior year.
Three Months Ended June 30
Second quarter 2023 sales increased $126m, or 10 percent, due to higher volume in both business areas. Battle Management & Missile Systems sales increased primarily due to higher volume on ammunition programs and the Integrated Air and Missile Defense Battle Command System (IBCS), Hypersonic Attack Cruise Missile (HACM) and advanced fuze programs. Mission Readiness sales increased principally due to higher volume on the NATO Alliance Ground Surveillance In-Service Support (NATO AGS ISS) program and an international training program. Operating Income Second quarter 2023 operating income decreased $2m, or 1 percent, due to a lower operating margin rate, which more than offset higher sales. Operating margin rate decreased to 11.7 percent from 13.0 percent primarily due to lower net EAC adjustments.
Three Months Ended June 30
Second quarter 2023 sales increased $125m, or 5 percent, primarily due to higher restricted sales in the Networked Information Solutions business area, as well as higher volume on marine systems programs and the Surface Electronic Warfare Improvement Program (SEWIP). These increases were partially offset by lower volume on the Ground/Air Task Oriented Radar (G/ATOR) program. Operating Income Second quarter 2023 operating income decreased $12m, or 3 percent, due to a lower operating margin rate, which more than offset higher sales.
Operating margin rate decreased to 15.2 percent from 16.4 percent primarily due to a prior year $33m benefit recognized in connection with a contract-related legal matter, as well as changes in contract mix toward more cost-type content.
Three Months Ended June 30
Second quarter 2023 sales increased $509m, or 17 percent, due to higher volume in both business areas. Launch & Strategic Missiles sales increased primarily due to ramp-up on development programs, including a $156m increase on the Ground Based Strategic Deterrent (GBSD) program and higher volume on the Next Generation Interceptor (NGI) and Ground-based Midcourse Defense Weapon Systems (GWS) programs. Sales in the Space business area increased primarily due to higher volume on restricted programs, the NextGeneration Overhead Persistent Infrared Polar (NextGen Polar) program and the Space Development Agency (SDA) Tranche 1 Tracking Layer program. These increases were partially offset by lower volume for Commercial Resupply Services (CRS) missions. Operating Income Second quarter 2023 operating income decreased $27m, or 9 percent, due to a lower operating margin rate, which more than offset higher sales. Operating margin rate decreased to 8.1 percent from 10.4 percent primarily due to lower net EAC adjustments, including a $36m unfavorable EAC adjustment on the HALO program largely due to cost growth stemming from evolving Lunar Gateway architecture and mission requirements combined with macroeconomic challenges, and a $15m write-down of commercial inventory.
26 Jul 23. VSE Corporation Announces Second Quarter 2023 Results.
VSE Corporation (NASDAQ: VSEC, “VSE”, or the “Company”), a leading provider of aftermarket distribution and maintenance, repair and overhaul (“MRO”) services for air, land and sea transportation assets for commercial and government markets, announced today results for the second quarter 2023.
SECOND QUARTER 2023 RESULTS1
(As compared to the Second Quarter 2022; excludes discontinued operations of Federal & Defense segment)
- Total Revenues of $205.2m increased 20.9%
- GAAP Net Income of $10.1m increased 112.2%
- GAAP EPS (Diluted) of $0.78 increased 110.8%
- Adjusted EBITDA of $26.5m increased 44.3%
- Adjusted Net Income of $10.6m increased 58.7%
- Adjusted EPS (Diluted) of $0.82 increased 57.7%
1 From continuing operations
“Strong business performance and market conditions in the second quarter of 2023 supported double-digit revenue growth and improved profitability in both our Aviation and Fleet segments,” said John Cuomo, President and CEO of VSE Corporation. “Our record results reflect our strengthening customer and supplier relationships, market share expansion, and robust end-market activity. We expect to build off this momentum in the second half of 2023, driven by the strong execution of recently awarded distribution programs, the expansion of new capabilities within MRO, and the scaling of our newly launched Memphis, Tennessee distribution and e-commerce fulfillment facility.”
“Our differentiated market position, strong program execution, and bespoke product and service offerings, supported by favorable long-term industry trends, will position us to deliver exceptional results in the second half of 2023 and beyond”, concluded Mr. Cuomo.
Steve Griffin, CFO of VSE Corporation, commented, “Following our oversubscribed secondary equity offering in July 2023, we have significantly strengthened our balance sheet and reduced net leverage, providing the Company with increased financial flexibility. Our balance sheet and improved cash flow in the second half of the year will serve as a catalyst for our strategic initiatives and allow us to pursue both organic and inorganic investment and growth opportunities.”
RECENT ANNOUNCEMENTS / STRATEGIC UPDATE
Strong Program Execution and Market Share Gains Driving Record Financial Performance
- Aviation segment second-quarter revenue increased 19%, driven by increased MRO activity and strong execution on new and existing distribution programs
- Fleet segment second-quarter revenue increased 24%, supported by contributions from all revenue channels with sales growth from e-commerce fulfillment accounts, commercial fleet customers, and the United States Postal Service
Balance Sheet Optimization
Completed Follow-on Equity Offering
- In July 2023, VSE completed a follow-on equity offering of 2,475,000 shares of common stock at $48.50 per share (“Offering”), resulting in net cash proceeds of approximately $112.7m
- VSE used substantially all of the net proceeds of the Offering to repay outstanding borrowings under the Company’s revolving credit facility
- The net proceeds of the Offering significantly increases balance sheet flexibility, allowing the Company to pursue both organic and inorganic growth opportunities
Executed Variable-to-Fixed Interest Rate Swap
- In July 2023, VSE executed a 3-year fixed interest rate swap (“Swap”) that hedges the variability in interest payments on $100 m of floating rate debt
- Following the execution of the Swap, VSE has hedged an aggregate of $250m of its variable debt
Repositioning of the Business
Sale of Federal & Defense Segment
- In May 2023, VSE entered into a definitive agreement to sell its Federal and Defense segment to Bernhard Capital Partners Management LP for up to $100m in total cash consideration, including a $50m earn-out, subject to certain re-compete(s) being awarded
- The transaction is expected to close in late 2023 or early 2024 and is subject to customary closing conditions and approvals
Acquisition of Desser Aerospace
- On July 3, 2023, VSE completed the acquisition of Desser Holding Company LLC (“Desser Aerospace”), a global aftermarket solutions provider of specialty distribution and MRO services
- VSE acquired Desser Aerospace assets for a net purchase price of $94m (subject to customary adjustments for working capital) following the sale of Desser Aerospace’s Proprietary Solutions
- VSE funded the acquisition with borrowings under a term loan facility and borrowings under the revolving credit facility
- The acquisition expands and diversifies the Company’s Aviation segment product and MRO capability offerings and provides a platform for growth into international markets
- The business will be fully integrated into the Aviation segment systems, processes and organization
SECOND QUARTER SEGMENT RESULTS
Aviation segment revenue increased 19% year-over-year to a record $124.7 m in the second quarter 2023. The year-over-year revenue improvement was attributable to strong program execution of new and existing distribution awards and increased MRO activity. Aviation distribution and repair revenue increased 13% and 37%, respectively, in the second quarter 2023, versus the prior-year period. The Aviation segment reported operating income of $15.8m in the second quarter, compared to $6.5m in the same period of 2022. Segment Adjusted EBITDA increased by 61% in the second quarter to $19.2m, versus $11.9m in the prior-year period. Adjusted EBITDA margin was 15.4%, an increase of approximately 400 basis points versus the prior-year period, driven primarily by strong MRO revenue growth, favorable product mix and price.
Fleet segment revenue increased 24% year-over-year to $80.5m in the second quarter 2023. Revenue from commercial customers increased 46% on a year-over-year basis, driven by growth in commercial fleet and e-commerce fulfillment. Commercial revenue represented 47% of total Fleet segment revenue in the period, a 7-point increase year-over-year. Revenue from the United States Postal Service (USPS) increased approximately 15% on a year-over-year basis, driven by an expansion of the installed base and increased support of legacy vehicle fleets. The Fleet segment reported operating income of $7.9m in the second quarter, compared to $5.4 m in the same period of 2022. Segment Adjusted EBITDA increased 23% year-over-year to $9.6m, and Adjusted EBITDA margin declined approximately 10 basis points to 11.9%, primarily impacted by customer mix and under-absorption of fixed costs at the newly launched distribution and e-commerce fulfillment facility.
FINANCIAL RESOURCES AND LIQUIDITY
As of June 30, 2023, the Company had $71m in cash and unused commitment availability under its $350 m revolving credit facility maturing in 2025. As of June 30, 2023, VSE had total net debt outstanding of $371 m and $99.8m of trailing-twelve months Adjusted EBITDA. Net leverage was 3.7 times as of the end of the second quarter.
The Company expects the net leverage ratio to be below 3.5 times by the end of the third quarter 2023, following Adjusted EBITDA contribution and free cash flow generation in the third quarter, proceeds from the recently announced common stock offering, and partially offset by the acquisition of Desser Aerospace.
In July 2023, the Company amended its credit facility with its lending syndicate in connection with the Desser Aerospace acquisition. The amendment provided for an incremental $90m Term Loan A and a revision of certain financial covenants of the existing facility.
VSE is increasing its full year 2023 revenue guidance. The Company is maintaining its Adjusted EBITDA margin guidance for its Aviation and Fleet segments and its positive free cash flow guidance for the second half of 2023. The new guidance is as follows:
- Aviation segment full year 2023 revenue guidance is increasing from 10 to 15% to 25 to 30% growth, as compared to the prior year, to reflect contributions from the recent Desser Aerospace acquisition and improved performance within distribution and MRO sales channels
- Aviation segment expects Adjusted EBITDA margin to be at the higher end of its previously provided guidance range of 13 to 15%
- Fleet segment full year 2023 revenue guidance is increasing from 12 to 20% to 20 to 25% growth, as compared to the prior year, to reflect strong growth in USPS sales and commercial customer market share gains
- Fleet segment is maintaining its Adjusted EBITDA margin guidance range of 11 to 13%
- The Company maintains its outlook for positive free cash flow in the second half of 2023 (Source: BUSINESS WIRE)
26 Jul 23. Amphenol Reports Second Quarter 2023 Results.
Second Quarter 2023 Highlights:
- Sales of $3.054bn, down 3% in U.S. dollars and 4% organically compared to the second quarter of 2022
- GAAP Diluted EPS of $0.74, down 3% compared to prior year
- Adjusted Diluted EPS of $0.72, down 4% compared to prior year
- GAAP and Adjusted Operating Margin of 20.3% and 20.4%, respectively
- Operating and Free Cash Flow of $536m and $442m, respectively
- Announces closing of previously announced acquisition of RFS and acquisition of EBY
Amphenol Corporation (NYSE: APH) today reported second quarter 2023 results.
“We are pleased to have closed the second quarter of 2023 with sales and Adjusted Diluted EPS both exceeding the high end of our guidance,” said Amphenol President and Chief Executive Officer, R. Adam Norwitt. “Sales decreased from prior year by 3%, driven by declines in the IT datacom, mobile networks and mobile devices markets, which was partially offset by growth in the commercial air, military and automotive markets as well as contributions from the Company’s acquisition program. Despite the moderation in our sales from prior year, our team executed strongly in the quarter, with Adjusted Operating Margin reaching 20.4%.”
During the second quarter of 2023, Amphenol continued to deploy its financial strength in a variety of ways to increase shareholder value. This included the repurchase of 2.0m shares of its common stock for $154m as well as the payment of dividends of $125m, resulting in total capital returned to shareholders of $280m.
“We remain focused on expanding our growth opportunities through a deep commitment to developing enabling technologies for customers across our served markets, an ongoing strategy of market and geographic diversification as well as an active and successful acquisition program. To that end, we are excited to have closed on the previously announced acquisition of the North American cable and global base station antenna businesses of RFS. Given the current challenging conditions in the mobile networks market, we now expect RFS to contribute approximately $30 m to second half 2023 sales.”
“We are also excited to have closed on the acquisition of EBY Electro Inc. (EBY) in July. Based in Long Island, New York and with annual sales of approximately $15m, EBY designs and distributes terminal block interconnect products to the industrial market, primarily in North America. The acquisition further expands our offering of high-technology interconnect products in the diversified industrial market, while adding another talented management team to the Amphenol family.”
Third Quarter 2023 Outlook
Assuming market conditions do not meaningfully worsen as well as constant exchange rates, for the third quarter of 2023, Amphenol expects sales to be in the range of $3.040bn to $3.100bn. This represents a 6% to 8% decline over the prior year quarter. Adjusted Diluted EPS is expected to be in the range of $0.72 to $0.74, representing an 8% to 10% reduction from the third quarter of 2022.
“Despite the ongoing challenges and uncertainties around the world, we are very pleased with the Company’s second quarter 2023 results,” Mr. Norwitt continued. “The revolution in electronics continues to accelerate, creating exciting long-term growth opportunities for Amphenol across each of our diversified end markets. Our ongoing drive to leverage our competitive advantages and create sustained financial strength, as well as our initiatives to expand our product offerings, both organically and through our acquisition program, have created an excellent base for the Company’s future performance. I am confident in the ability of our outstanding entrepreneurial management team to continue to dynamically adjust to changing market conditions, to capitalize on the wide array of growth opportunities that arise in all market cycles and to continue to generate sustainable long-term value for our shareholders and other stakeholders. Most importantly, I remain truly grateful to our team for their extraordinary efforts in navigating the many challenges around the world while continuing to strongly support our customers and drive outstanding operating performance.” (Source: BUSINESS WIRE)
26 Jul 23. Teledyne Technologies Reports Second Quarter Results.
- Record quarterly sales of $1,424.7m, an increase of 5.1% compared with last year
- Record second quarter GAAP diluted earnings per share of $3.87
- Record second quarter non-GAAP diluted earnings per share of $4.67
- Record second quarter GAAP operating margin of 18.0%
- Second quarter non-GAAP operating margin of 21.4%
- Full year 2023 GAAP diluted earnings outlook of $15.60 to $15.88 per share
- Reiterating full year 2023 non-GAAP earnings outlook of $19.00 to $19.20 per share, excluding further FLIR-related pretax integration costs of $10.0m to $12.0m in the second half of 2023
- Reduced gross debt $620 m year-to-date through July 26
Teledyne today reported second quarter 2023 net sales of $1,424.7m, compared with net sales of $1,355.8m for the second quarter of 2022, an increase of 5.1%. Net income attributable to Teledyne was $185.3m ($3.87 diluted earnings per share) for the second quarter of 2023, compared with $171.3m ($3.59 diluted earnings per share) for the second quarter of 2022, an increase of 8.2%. The second quarter of 2023 included $49.3m of pretax acquired intangible asset amortization expense as well as $0.4m of acquisition related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the second quarter of 2023 was $223.7m ($4.67 diluted earnings per share). The second quarter of 2022 included $51.3m of pretax acquired intangible asset amortization expense as well as $0.6m of acquisition related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the second quarter of 2022 was $211.3m ($4.43 diluted earnings per share). Operating margin was 18.0% for the second quarter of 2023, compared with 16.9% for the second quarter of 2022. Excluding pretax acquired intangible asset amortization expense, non-GAAP operating margin for the second quarter of 2023 was 21.4%, compared with 20.7% for the second quarter of 2022.
“In the second quarter, we achieved all-time record quarterly sales. Furthermore, sales as well as GAAP and non-GAAP operating margins increased year-over-year in every segment,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “Both orders and quarter-end backlog were nearly records driven by our Digital Imaging segment especially Teledyne FLIR. Nevertheless, we have begun further integration and facility consolidation activities, as we accelerate the relocation of select Teledyne FLIR operations to existing sites. Including continued debt repayment through July, our consolidated leverage ratio declined to 2.1x, and we continue to seek disciplined capital deployment including acquisitions.”
Review of Operations
Comparisons are with the second quarter of 2022, unless noted otherwise.
The Digital Imaging segment’s second quarter 2023 net sales were $793.3m, compared with $775.8m, an increase of 2.3%. Operating income was $124.6m for the second quarter of 2023, compared with $117.9m, an increase of 5.7%.
The second quarter of 2023 net sales increase resulted primarily from $28.8m in incremental sales from recent acquisitions as well as greater sales of x-ray products, commercial infrared imaging components and solutions, and industrial and scientific cameras, partially offset by lower sales of unmanned ground systems for defense applications. The increase in operating income was primarily due to increased net sales. Acquired intangible amortization expense for the second quarter of 2023 was $45.6m compared with $46.4m.
The Instrumentation segment’s second quarter 2023 net sales were $328.4m, compared with $312.5m, an increase of 5.1%. Operating income was $81.4m for the second quarter of 2023, compared with $73.6m, an increase of 10.6%.
The second quarter of 2023 net sales increase resulted from higher sales across the marine instrumentation and test and measurement instrumentation product lines. Sales of marine instrumentation increased $12.1m and sales of test and measurement instrumentation increased $4.0m. Sales of environmental instrumentation decreased $0.2m. The increase in operating income primarily reflected the impact of higher sales and favorable product mix.
Aerospace and Defense Electronics
The Aerospace and Defense Electronics segment’s second quarter 2023 net sales were $186.0m, compared with $168.8m, an increase of 10.2%. Operating income was $53.2m for the second quarter of 2023, compared with $44.1m, an increase of 20.6%.
The second quarter of 2023 net sales reflected higher sales of $9.6m for defense electronics and $7.6m for aerospace electronics. The increase in operating income primarily reflected the impact of higher sales and improved margins across most defense electronics product categories.
The Engineered Systems segment’s second quarter 2023 net sales were $117.0m, compared with $98.7m, an increase of 18.5%. Operating income was $11.5m for the second quarter of 2023, compared with $8.6m, an increase of 33.7%.
The second quarter 2023 net sales reflected higher sales of $14.8m for engineered products and $3.5m for energy systems. The increase in operating income primarily reflected the impact of higher sales.
Additional Financial Information
Cash provided by operating activities was $190.5m for the second quarter of 2023 compared with $196.9m. Depreciation and amortization expense for the second quarter of 2023 was $80.0 m compared with $82.7m. Stock-based compensation expense for the second quarter of 2023 was $8.4m compared with $6.4m.
Capital expenditures for the second quarter of 2023 were $27.3m compared with $20.8m. Teledyne received $4.8m from the exercise of stock options in both the second quarter of 2023 and 2022.
As of July 2, 2023, net debt was $2,989.1m which is calculated as total debt of $3,353.3m, net of cash and cash equivalents of $364.2m. As of January 1, 2023, net debt was $3,282.5m and included total debt of $3,920.6m, net of cash and cash equivalents of $638.1m. Teledyne repaid $570.0m of debt during the first half of 2023, including paying $300.0m of debt that matured in April 2023 and making $260.0m of floating rate debt payments which reduced its term loan due May 2026 by $135.0m and reduced its outstanding credit facility balance by $125.0m. In addition, during the second quarter of 2023, Teledyne repurchased and retired $10.0m of our Fixed Rate Senior Notes due April 2031, recording a $1.6m non-cash gain on the extinguishment of this debt. Subsequent to the end of the second quarter of 2023, the Company repaid $50.0m outstanding on its term loan due May 2026.
As of July 2, 2023, $1,131.1m was available under the $1.15bn credit facility, after reductions of $18.9m in outstanding letters of credit.
The effective tax rate for the second quarter of 2023 was 21.0%, compared with 22.7%. The second quarter of 2023 reflected net discrete income tax benefits of $1.4m compared with $1.0m. Excluding the net discrete income tax items in both periods, the effective tax rates would have been 21.6% for the second quarter of 2023, compared with 23.1%.
Corporate expense was $14.6m for the second quarter of 2023 compared with $14.7m. Non-service retirement benefit income was $2.9m for both the second quarter of 2023 and 2022. Interest expense, net of interest income, was $22.3m for the second quarter of 2023 compared with $22.5m.
Based on its current outlook, the company’s management believes that third quarter 2023 GAAP diluted earnings per share will be in the range of $3.76 to $3.90 and full year 2023 GAAP diluted earnings per share will be in the range of $15.60 to $15.88. The company’s management further believes that third quarter 2023 non-GAAP diluted earnings per share will be in the range of $4.70 to $4.80 and full year 2023 non-GAAP diluted earnings per share will be in the range of $19.00 to $19.20. The non-GAAP outlook excludes acquired intangible asset amortization for all acquisitions, further FLIR integration costs and benefits or charges for acquisition-related tax matters. The company’s annual expected tax rate for 2023 is 22.3%, before discrete tax items. (Source: BUSINESS WIRE)
27 Jul 23. Mildef Interim Report January – June 2023.
STRONG GROWTH DRIVES INCREASED PROFITABILITY
Financial development Q2 2023
- Net sales increased by 144% to SEK 288.8m (118.5).
- The gross margin was 50% (49).
- Adjusted EBITDA amounted to SEK 47.7m (-9.6), equivalent to an adjusted operating margin of 16.5% (-8.1).
- Operating profit (EBIT) amounted to SEK 33.6m (-15.0), corresponding to an operating margin of 11.6% (-12.7).
- Order intake increased by 11% to SEK 285.5m (256.4).
- Operating cash flow amounted to SEK -4.2m (-49.0).
Financial development January – June 2023
- Net sales increased by 120% to SEK 572.0m (259.8).
- The gross margin was 48% (48).
- Adjusted EBITDA amounted to SEK 81.7m (-3.3), equivalent to an adjusted operating margin of 14.3% (-1.3).
- Operating profit (EBIT) amounted to SEK 55.3m (-14.8), corresponding to an operating margin of 9.7% (-5.7).
- Order intake increased by 74% to SEK 628.4m (360.3).
- Order backlog as of June 30, 2023 increased by 41% to SEK 1,288m compared with the same date in 2022 (913).
- Operating cash flow amounted to SEK 24.5m (-5.6).
- Earnings per share after dilution over the last 12-month period amounted to SEK 1.61 (0.25).
Summary of significant events in the second quarter, April – June 2023
- MilDef wins a three-year contract for digitalization of Swedish Amphibious Corps support ship. The assignment is part of the framework agreement that MilDef signed with the Swedish Defence Materiel Administration (FMV) in 2022.
- MilDef is accelerating its investment in the USA by consolidating the leadership of the US operations. From July 2023 Jim Rimay, currently CEO of Handheld US Inc., will take over management of all of MilDef’s operating units in the USA.
- MilDef extends its framework agreement with the Norwegian Defence Materiel Agency (NDMA). The agreement has now been extended for two more years – from 2023 to 2025.
- In May MilDef recruits Viveca Johnsson as new CFO. Viveca has a solid financial background as well as experience from the industrial sector. She comes to MilDef from Nederman, an industrial company where she has worked since 2013. Viveca will join MilDef’s Management Team and report directly to the CEO.
Summary of significant events after the end of the period
- MilDef’s subsidiary Handheld secures a strategically important development project assignment with a global defense group to develop soldier-borne control systems for ultra-small drones. After the development phase, we see good opportunities for significant volume orders. In the press release issued on July 24, it was incorrectly stated that the order was included in the order backlog as of June 30, 2023. The order was received in the third quarter and will therefore be included in the third quarter.
- No other events considered of significance have taken place since the end of the period up to the signing of this interim report.
Statement by Daniel Ljunggren, CEO MilDef Group
A gradually more active market
MilDef’s first half of 2023 is strong. Organic growth remained high in the second quarter and sales increased by a total of 144%. Sales in the first half of the year reached SEK 572 m (260) and order intake amounted to SEK 628 m (360). The operating margin also improved significantly, proving the success of our scalable business model. It is worth noting that sales in the second quarter, on a rolling 12-month basis, exceeded SEK 1 bn for the first time. This development reflects a market in which activity is steadily increasing – a market that will likely continue to grow for many years to come.
Our main priority for 2023 is to successfully deliver on schedule to our customers. The global supply chain challenges that have existed over the past two years have resulted in delivery delays, which have in turn negatively impacted our profitability and cash flow. I am therefore happy to state that also in the second quarter we saw increased profitability and a clearly improved operating cash flow, driven by strong sales growth and good delivery capability.
Cash flow and working capital
Due to the global challenges in supply chains of the past few years we have decided to build up a buffer of critical components in order to meet our delivery commitments to our customers. As a consequence of this strategy our working capital has increased. Added to this are the negative effects on the working capital from the Handheld acquisition implemented in the third quarter of 2022. We expect current inventory levels to remain steady in absolute terms over the next few quarters, mainly due to our continued growth rate. However, we expect working capital as a percentage of sales, on a rolling 12-month basis, to normalize in upcoming quarters, and in the longer term to return to historical levels of around 20–25% of sales. This in turn will have a positive effect on operating cash flow in the coming 6–12 months.
Increased demand for digitalization within the defense sector
Since Russia launched its invasion of Ukraine our customers have prioritized their operational capacity over long-term modernization and digitalization. This coincides with a significant increase in demand for future digitalization. Digitalization of national defense forces is aimed at increasing the capabilities of decision-makers, enabling them to make better and faster decisions thanks to the availability of more information on which to base their decisions. Pens, compasses and paper maps are replaced by realtime digital information. By delivering the necessary infrastructure, MilDef is playing a key role in helping multiple defense forces to realize their ambition of increasing their digital capabilities. Against the background of the current defense appropriations – which are growing in general – we are seeing a steady increase in activity in the market, although this is still not having any material impact on our order intake. Given MilDef’s late-cycle position in the delivery chain, we expect demand for our products and services to increase substantially in the future. The fact that we, despite the described “slowness in the system”, deliver such good numbers is a clear confirmation of MilDef’s strength.
Accelerated ambitions in the North American market
We accelerate our ambitions in the North American market during the quarter by realizing one of the synergies we identified in connection with the Handheld acquisition. Jim Rimay who has headed Handheld’s US operations since 2015 was given responsibility for all of MilDef’s operations in the USA. This move will ensure leadership in the USA that is clearly focused on developing sales and business. Jim, who has many years of experience in North America, is expected to be a key figure in our continued strong growth in the USA. MilDef sees the North American market as a key market in the future and we already have a solid foundation on which to build with our existing customer base. I look forward to continuing to support our growth in North America and, together with our US team, to ensure we are well-positioned for continued success in the world’s single largest defense market.
Breakthrough in realizing commercial synergies
It gives me great pleasure to be able to report that we have now realized the first transaction linked to the commercial synergies we identified when we acquired Handheld. At the time of the acquisition we communicated that there was potential for synergies such as significant cross-selling, above all of Handheld’s products for the military domain. We secured one such deal at the beginning of the third quarter. The initial order for product development is worth SEK 6 m and the customer is a global defense group based in the USA. After the development phase is completed we believe there will be opportunities to secure an order for significant recurring volumes over the years ahead. Our ambition is to follow this up with several similar deals. The deal confirms the trend we have seen before, namely that existing and prospective customers want MilDef as a long-term strategic partner and not only as a supplier. This trend is undoubtedly one of the fundamental success factors for MilDef.
Steep growth pace creates positive challenges
A fast growth pace brings challenges and sometimes leads to growing pains. We have addressed this challenge and, by investing in our corporate culture and our people, we are determined to continue to make MilDef a stronger, more resilient company. Our actions today are more important than ever before. All of our employees are working hard to deliver excellence to our customers and, in doing so, are helping to make this a safer world. It is therefore gratifying to see the increased interest in MilDef, despite tough competition in the labor market. During the quarter we welcomed more than fifteen new employees and I’m convinced that together we will make MilDef even stronger and more profitable.
LSS Mark and the review process
As communicated in the first quarter, MilDef has applied for a review of the “LSS Mark – Unit Integrator” procurement. The procurement is for digitalization of the Swedish ground forces. We expect the Stockholm Administrative Court to announce a ruling in the case in the third quarter. Regardless of the outcome, we believe there are good opportunities to deliver considerable volumes of hardware and services in the Swedish market – both aimed at facilitating next generation digitalization of the Swedish defense forces.
Sustainability work worth highlighting
At MilDef we are determined to make sustainability an integral part of our work – both today and in the future. Sustainability is a key aspect of our strategy and I’m proud of the widespread commitment to sustainability among all of our employees. I would like to highlight in particular something that makes me even more proud – our MilDef Charity Foundation (MCF). MCF was established in 2014 and since then has provided vulnerable individuals with a better future. Every year 1% of MilDef’s operating profit goes towards funding MCF. You, our shareholders, can be extra proud of this too – you are contributing to a brighter future for the most vulnerable among us.
Positive expectations in 2023
“The forward-looking investments that were made over the past few years, in combination with a strong order backlog and an increasingly active market, enable us to predict sustained strong sales, order intake and profitability in 2023. Our operations aimed at the military domain are and will remain our core business. Our confidence in our ability to continue growing in that domain is based on raised defense spendings, increased and pent-up demand for digitalization and on the market share we have won.
I’m excited, curious and greatly humbled as I take on the role as President and CEO of MilDef. I would also on this occasion like to take the opportunity to thank our employees, customers, suppliers and owners for a successful quarter.” Daniel Ljunggren, President and CEO of MilDef Group.
26 Jul 23. L3Harris says deal for Aerojet gets go-ahead from U.S. regulator. Aerospace and defense company L3Harris Technologies (LHX.N) on Wednesday said it was informed that the U.S. Federal Trade Commission would not block its $4.7bn deal for Aerojet Rocketdyne (AJRD.N).
The company also raised its full-year forecasts for revenue and profit as the Ukraine war drives up demand for defense equipment.
U.S. Senator Elizabeth Warren and some other lawmakers had urged the Defense Department to thoroughly review the proposed deal, saying it could impact the operations of Lockheed Martin, Raytheon and Boeing – all of which depend on products that only Aerojet is able to produce.
Aerojet makes liquid and solid rocket propulsion and hypersonic engines for space, defense, civil and commercial applications.
L3Harris, which announced it would buy Aerojet in December, said it expects to close the deal on or about July 28. The FTC did not immediately respond to a Reuters request for comment.
With the Ukraine war driving up demand for missiles and defense systems, Aerojet became an attractive takeover target.
In 2022, Lockheed Martin (LMT.N) walked away from its deal with Aerojet after antitrust regulators sued to block it on competition concerns.
On Wednesday, L3Harris raised its annual revenue forecast to between $18 bn and $18.3bn, from $17.4bn to $17.8bn estimated earlier.
L3Harris now expects profit to be between $12.15 and $12.55 per share, from $12 to $12.50 estimated earlier. Formed by the merger of L3 Technologies and Harris Corp in 2019, the defense contractor’s customers include the Pentagon, Boeing (BA.N), Lockheed Martin and RTX Corp (RTX.N). (Source: Reuters)
27 Jul 23. France’s Safran raises forecasts amid air travel boom. Jet engine maker Safran (SAF.PA) raised profit and cashflow forecasts on Thursday after core income jumped in the first half, led by demand for spares and services as airlines boost flights to meet a recovery in travel demand. Recurring operating income rose 33% to 1.397bn euros ($1.55bn) and revenues rose 26% to 10.945 bn on a like-for-like basis in the first six months, the French aerospace supplier said. Safran generated almost 1.5bn euros of free cashflow.
The Paris-based group said it was now targeting full-year recurring operating income of 3.1bn euros versus 3.0bn previously, and 2.7bn euros in free cashflow compared with a previous target of 2.5bn.
Safran also said it was launching a 1-bn-euro share buyback to be completed by the end of 2025.
Its widely watched civil aftermarket revenues rose 36.5% in dollar terms, driven by strong parts sales for the CFM56, the previous generation of narrow-body jet engines that Safran co-produces with GE (GE.N) through their joint venture CFM.
Deliveries of the current-generation LEAP engines, used on all Boeing 737 MAX jets and about half of Airbus’s A320neo fleet, rose 69% to 785 units.
GE earlier this week raised its full-year profit outlook on robust demand for jet engine spare parts and services from airlines looking to cash in on surging air travel. ($1 = 0.9008 euros) (Source: Reuters)
26 Jul 23. Airbus posts higher profit, removes near-term output goal.
Europe’s Airbus (AIR.PA) on Wednesday posted higher-than-expected underlying operating profit for the second quarter and reaffirmed financial goals for the year, while removing an interim industrial target on the route to record jet output.
The world’s largest planemaker said adjusted earnings before interest and tax rose 34% to 1.845bn euros ($2.04bn) as revenues grew 24% to 15.9 bn euros, buoyed by higher jet deliveries.
Analysts had forecast quarterly operating profit of 1.725bn euros on revenues of 15.867bn, according to a company-compiled consensus.
Airbus said it was “progressing well” towards a widely watched production goal for its best-selling A320neo-family jets of 75 jets a month in 2026, which it reaffirmed.
But it withdrew any public mention of a previously stated interim goal of 65 a month by end-2024.
Tactical adjustments will be made as required to meet the ultimate 75-per-month rate, “which is now the key reference point for the company and the supply chain,” Airbus said.
Chief Executive Guillaume Faury denied the decision to retire the interim target from the company’s official releases signalled any lack of confidence in its production plans.
He said the 65-a-month target – slightly above what Airbus was producing before the pandemic – had been an important milestone in post-COVID recovery that was no longer relevant.
However some suppliers were surprised by the decision to remove the target. Airbus told them during the Paris Airshow last month that it saw “no change” to its goals, they said.
One senior supplier said the decision would not help Airbus’ credibility as it encourages suppliers to hire and invest.
Industry sources say Airbus is producing about 47 narrow-body A320neo-family jets a month, below an internal planning rate of 55 a month that it had aimed for by mid-2023.
Airbus reaffirmed production plans for other models.
Faury also said he understood the “critical situation” some customer airlines faced after RTX (RTX.N) unit Pratt & Whitney ordered surprise inspections on Tuesday on 1,200 A320neo engines, including some during the upcoming peak summer period.
Faury said he did not expect Airbus output to be affected in 2023 but did not rule out “indirect consequences” beyond then as Pratt is distracted by the latest in a series of setbacks.
“I don’t expect a significant impact but it is something we would need to look at very carefully. We are not yet at the point of commenting on 2024 and 2025 production, but it is something we will obviously factor in our plans.”
He said the Pratt problem had “nothing to do” with the decision to stop giving an interim production goal.
Faury said Airbus was bring its A321XLR jet as close as possible to promised performance after an agreement with regulators over the design of a heavy extra fuel tank.
Reuters reported last week that the range of the aircraft could drop by 200 miles due to latest design safeguards.
In other activities, Faury announced talks with unions on internal moves to improve competitivity in the group’s barely profitable defence and space business but ruled out M&A.
France’s FO union said the outlines of the “ATOM” project remained unclear at this stage but warned against job cuts.
Airbus reaffirmed 2023 financial targets including 720 jet deliveries, 6.0bn euros of adjusted operating profit and free cashflow before M&A and customer financing of 3.0bn.
Shares in Boeing (BA.N) rose earlier after it announced an increase in jet production and posted stronger-than-expected quarterly cashflow.
($1 = 0.9034 euros) (Source: Reuters)
26 Jul 23. Airbus reports Half-Year (H1) 2023 results.
- 316 commercial aircraft delivered in H1 2023
- Revenues €27.7bn; EBIT Adjusted €2.6bn
- EBIT (reported) €1.9bn; EPS (reported) €1.94
- Free cash flow before M&A and customer financing € 1.6bn
- Guidance maintained
Airbus SE (stock exchange symbol: AIR) reported consolidated financial results for the Half-Year (H1) ended 30 June 2023.
“During the first half of 2023 we progressed well across our businesses in an operational environment that remains complex. Our commercial aircraft are in strong demand, as demonstrated by more than 800 orders announced at the Paris Air Show. This demand is driven both by growth and fleet replacement as airlines invest in more fuel efficient fleets,” said Guillaume Faury, Airbus Chief Executive Officer. “Based on this H1 performance, we maintain our 2023 guidance.”
Gross commercial aircraft orders totalled 1,080 (H1 2022: 442 aircraft) with net orders of 1,044 aircraft after cancellations (H1 2022: 259 aircraft). The order backlog amounted to a record 7,967 commercial aircraft at the end of June 2023. Airbus Helicopters registered 131 net orders (H1 2022: 163 units) which were well spread across programmes and included 19 H160s. Airbus Defence and Space’s order intake by value was €6.0bn (H1 2022: €6.5bn), including 4 new-build and 5 converted A330 Multi Role Tanker Transport aircraft for Canada.
Consolidated revenues increased 11 percent year-on-year to €27.7bn (H1 2022: €24.8bn). A total of 316 commercial aircraft were delivered (H1 2022: 297(1)(2) aircraft), comprising 25 A220s, 256 A320 Family, 14 A330s and 21 A350s. Revenues generated by Airbus’ commercial aircraft activities increased 16 percent, mainly reflecting the higher number of deliveries. Airbus Helicopters’ deliveries increased to 145 units (H1 2022: 115 units), mainly driven by the Light helicopter segment. The Division’s revenues rose 16 percent, mainly reflecting a solid performance across programmes and services. Revenues at Airbus Defence and Space decreased 8 percent, mainly driven by delays in Space Systems and delivery phasing in Military Air Systems. Three A400M military airlifters were delivered in H1 2023.
Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – was €2,618m (H12022: €2,645m).
EBIT Adjusted related to Airbus’ commercial aircraft activities was broadly stable at €2,256m (H1 2022: €2,276m). The positive effect from the increase in deliveries, supported by a more favourable hedge rate, was partially reduced by investments for preparing the future. H1 2022 included the non-recurring positive impact from retirement obligations partly offset by the impact resulting from international sanctions against Russia. In H1 2023, further progress was made on compliance related topics which allowed provisions to be released.
The ramp-up on the A220 programme is continuing towards a monthly production rate of 14 aircraft in the middle of the decade. On the A320 Family programme, production is progressing well towards the previously announced rate of 75 aircraft per month in 2026. Tactical adjustments to production planning will continue to be made as required to meet this target rate, which is now the key reference point for the Company and the supply chain. The recent inauguration of a new A321 capable final assembly line in Toulouse is the latest concrete milestone in the development of Airbus’ global industrial system. On the A321XLR, the flight test programme is progressing towards the expected entry-into-service in Q2 2024.
On widebody aircraft, the Company continues to target rate 4 for the A330 in 2024 and rate 9 for the A350 at the end of 2025.
Airbus Helicopters’ EBIT Adjusted increased to €274m (H1 2022: €215m), reflecting the solid performance across programmes and services. H1 2022 also included net positive non-recurring elements.
EBIT Adjusted at Airbus Defence and Space decreased to €78m (H1 2022: €155m), mainly reflecting the decrease in revenues as well as updated assumptions on some long-term contracts, consistent with the difficult environment of the Division’s Space business. H1 2022 also included net positive non-recurring elements.On the A400M programme, development activities continue towards achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer. No further net material impact was recognised in the first half of 2023. Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing overall volume as per the revised baseline.
Consolidated self-financed R&D expenses totalled €1,431m (H1 2022: €1,256m).
Consolidated EBIT (reported) amounted to €1,887m (H1 2022: €2,579m), including net Adjustments of €-731m.
These Adjustments comprised:
- €-651m related to the dollar pre-delivery payment mismatch and balance sheet revaluation, of which € -291 m were in Q2. This is mainly linked to the phasing impact arising from the difference between transaction date and delivery date;
- € -34m related to the Aerostructures transformation, of which €-25m were in Q2;
- €-46m of other costs including compliance, of which €-32m were in Q2.
The financial result was €102m (H1 2022: €107m). It mainly reflects a positive impact from the revaluation of certain equity investments, partly offset by the net interest result and negative impacts from the revaluation of financial instruments. Consolidated net income(3) was € 1,526m (H1 2022: €1,901m) with consolidated reported earnings per share of €1.94 (H1 2022: €2.42).
Consolidated free cash flow before M&A and customer financing was €1,574m (H1 2022: €1,955m), reflecting progress on deliveries as well as an increase in inventory linked to the ongoing ramp-up across programmes. It also includes a favourable timing of receipts and payments.
Consolidated free cash flow was €1,474m (H1 2022: €1,646m). The gross cash position stood at €22.9bn at the end of June 2023 (year-end 2022: €23.6bn), with a consolidated net cash position of € 9.1 bn (year-end 2022: €9.4bn).
The guidance issued in February 2023 is maintained.
As the basis for its 2023 guidance, the Company assumes no additional disruptions to the world economy, air traffic, the supply chain, the Company’s internal operations, and its ability to deliver products and services.
The Company’s 2023 guidance is before M&A.
On that basis, the Company targets to achieve in 2023 around:
- 720 commercial aircraft deliveries;
- EBIT Adjusted of €6.0bn;
- Free Cash Flow before M&A and Customer Financing of €3.0bn.
26 Jul 23. General Dynamics profit beats estimates on military equipment demand. Defense contractor General Dynamics Corp (GD.N) on Wednesday reported a better-than-expected quarterly profit, helped by resilient demand for military equipment, sending its shares up 2% in premarket trading.
General Dynamics benefited from robust demand for weapons, driven by simmering geopolitical tensions in the Indo-Pacific region, conflict in Ukraine and military modernization efforts of ally countries.
Revenue at the marine systems segment, which makes ships in addition to submarines, rose 15.4%, boosted by a $1.1bn contract from the U.S. Navy for long-lead materials and the advance construction for Block V Virginia-class submarines.
Demand for business jets, which surged during the pandemic as wealthy passengers sought to avoid COVID restrictions, remains buoyant despite the recovery in commercial flights.
The aerospace segment booked $2.5bn in new orders during the quarter, driven by strong demand for the company’s Gulfstream business aircraft.
Gulfstream deliveries in the second quarter were at 24 jets, compared with 22 in the same period a year ago.
The company reported a backlog of $91.4bn, compared to $87.6bn. Its book-to-bill ratio, which is the ratio of orders received to units shipped and billed, was 1.2-to-1.
Total revenue at the Reston, Virginia-based company rose 10.5% to $10.15bn.
Net earnings came in at $744m, or $2.70 per share, in the quarter ended July 2, compared with $766m, or $2.75 per share, a year earlier.(Source: Google/Reuters)
26 Jul 23. General Dynamics Reports Second-Quarter 2023 Financial Results.
- Revenue of $10.2bn, up 10.5% year-over-year, with growth in all four segments
- Net earnings $744m, diluted EPS $2.70
- Record-high backlog of $91.4bn, 1.2-to-1 book-to-bill
General Dynamics Corporation (NYSE: GD) today reported second-quarter 2023 net earnings of $744m on revenue of $10.2bn. Diluted earnings per share (EPS) were $2.70.
“Our businesses demonstrated solid momentum despite continued supply chain headwinds in several units, achieving the highest-ever revenue for a mid-year quarter, record-high backlog and very strong cash flow,” said Phebe N. Novakovic, chairman and chief executive officer. “We are well positioned to continue to perform for the remainder of the year.”
Net cash provided by operating activities in the quarter totaled $731m. For the first half of the year, net cash provided by operating activities totaled $2.2bn, or 149% of net earnings. During the quarter, the company repaid $750m in fixed-rate notes, invested $212m in capital expenditures, paid $360m in dividends, and used $288m to repurchase shares, ending the quarter with $1.2bn in cash and cash equivalents on hand. In the previous 12 months, the company reduced total debt by $1.7bn.
Good order activity across the segments yielded a consolidated book-to-bill ratio, defined as orders divided by revenue, of 1.2-to-1 for the quarter. The company ended the quarter with record-high backlog of $91.4bn, a 4.3% increase from the year-ago quarter. Estimated potential contract value, representing management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $38 bn. Total estimated contract value, the sum of all backlog components, was $129.3bn at the end of the quarter.
The Aerospace segment booked $2.5bn in new orders, driven by strong demand for Gulfstream aircraft.
Significant awards in the quarter for the three defense segments included $340m from the U.S. Army for various munitions and ordnance with maximum potential value of $1.4bn; $1.1bn from the U.S. Navy for long-lead materials and advance construction for Block V Virginia-class submarines; $735m from the Navy for construction of an additional John Lewis-class (T-AO-205) fleet replenishment oiler; $695m from the Army to design, build and test prototype XM30 Mechanized Infantry Combat Vehicles, with additional option value of $75m; $710m from the Army to upgrade Stryker vehicles to the double-V-hull A1 configuration; and $435m for several key contracts for classified customers, with additional options and potential contract value of $935m.
26 Jul 23. Rolls-Royce leaps as airline and defence demand lifts profits. Aero-engineer Rolls-Royce (RR.L) hiked its full-year operating profit forecast by around 45% on Wednesday after operational improvements, increased military spending and a recovery in long-haul flying delivered a stronger-than-expected first half.
Shares in the British company jumped 20% to 183 pence, the highest level since the start of the pandemic in March 2020.
The company said it now expected profit this year of between 1.2 bn and 1.4bn pounds ($1.6-1.8bn), up from its previous guidance of between 800m and 1 bn pounds. The market had been forecasting 934m pounds.
Chief Executive Tufan Erginbilgic, who joined the company in January, said his turnaround had started well, with progress already evident across the company.
“Despite a challenging external environment, notably supply chain constraints, we are starting to see the early impact of our transformation in all our divisions,” he said on Wednesday.
Rolls-Royce, like rival General Electric Co (GE.N), is benefiting from a faster-than-expected recovery in aviation from pandemic lows, boosting demand for lucrative aftermarket services.
GE on Tuesday raised its own full-year profit outlook on robust demand for its jet engine spare parts and services.
Bernstein analysts said the primary driver of Rolls-Royce’s better first-half and full-year performance was improved operations, a key priority for Erginbilgic.
The company, whose engines power the Airbus A350 and Boeing 787 long-haul jets, said underlying operating profit for the first six months would come in at just over twice the market expectation of 328 m pounds.
A large part of Rolls-Royce’s revenue is tied to the hours flown by its engines, a model that plunged it into crisis when planes were grounded during the pandemic.
A rebound in flying, however, is now benefiting the company, as is increased defence spending due to the war in Ukraine, and Wednesday’s jump means the company’s stock has nearly doubled this year.
The group said it would produce up to 360 m pounds of free cash flow for the six months to end-June, soundly beating the 50 m pounds forecast, and it could produce as much as 1 bn pounds of cash in the full year.
It will publish its first-half results on Aug. 3.
($1 = 0.7755 pounds) (Source: Google/Reuters)
26 Jul 23. Boeing Reports Second Quarter Results.
Second Quarter 2023
- Transitioning 737 production to 38 per month; increased 787 production to four per month
- Revenue increased to $19.8bn primarily reflecting 136 commercial deliveries
- Operating cash flow of $2.9bn and free cash flow of $2.6bn (non-GAAP); cash and marketable securities of $13.8bn
- Total company backlog of $440bn, including over 4,800 commercial airplanes
- Reaffirm guidance: $4.5-$6.5bn of operating cash flow and $3.0-$5.0bn of free cash flow (non-GAAP)
The Boeing Company [NYSE: BA] recorded second quarter revenue of $19.8bn, GAAP loss per share of ($0.25) and core loss per share (non-GAAP)* of ($0.82). Second quarter results reflect higher commercial volume and lower defense margins. Boeing generated operating cash flow of $2.9bn and free cash flow of $2.6bn (non-GAAP).
“We had a solid second quarter with improved deliveries and strong free cash flow generation. We are well positioned to meet the operational and financial goals we set for this year and for the long term,” said Dave Calhoun, Boeing president and chief executive officer. “While we have more work ahead, we are making progress in our recovery and driving stability in our factories and the supply chain to meet our customer commitments. With demand strong, we’re steadily increasing our production rates across key programs and growing investments in our peOperating cash flow was $2.9bn in the quarter reflecting higher commercial deliveries and favorable receipt timing.
Cash and investments in marketable securities totaled $13.8bn, compared to $14.8bn at the beginning of the quarter. Debt was $52.3bn, down from $55.4bn at the beginning of the quarter due to the pay down of maturing debt. The company maintains access to credit facilities of $12.0bn, which remain undrawn.
Total company backlog at quarter end was $440bn.
Commercial Airplanes second quarter revenue increased to $8.8bn driven by higher 787 deliveries. Operating margin of (4.3) percent also reflects abnormal costs and period expenses, including research and development.
The 737 program is transitioning production to 38 per month and plans to reach 50 per month in the 2025/2026 timeframe. The program still expects to deliver 400-450 airplanes this year.
The 787 program increased production to four per month with plans to ramp to five per month in late 2023 and 10 per month in the 2025/2026 timeframe. The program still expects to deliver 70-80 airplanes this year.
During the quarter, Commercial Airplanes booked 460 net orders, including 220 for Air India and 39 for Riyadh Air, and secured a commitment from Ryanair for up to 300 737 MAX airplanes. Commercial Airplanes delivered 136 airplanes during the quarter and backlog included over 4,800 airplanes valued at $363bn.
Defense, Space & Security
Defense, Space & Security second quarter revenue was $6.2bn. Second quarter operating margin was (8.5) percent, primarily driven by losses on certain fixed-price development programs, as well as continued operational impacts of labor instability and supply chain disruption on other programs. The Commercial Crew program recorded a $257m loss primarily due to the impacts of the previously announced launch delay. The T-7A program recorded a $189 m loss primarily due to higher estimated costs on production contracts. The MQ-25 program also recorded a $68m loss primarily due to schedule delays on the Engineering and Manufacturing Development contract.
During the quarter, Defense, Space & Security completed the U.S. Air Force first flight of the T-7A Red Hawk, began construction on the Advanced Coatings Center in St. Louis and captured an award from the U.S. Army for 19 CH-47 Chinooks. Backlog at Defense, Space & Security was $58bn, of which 31 percent represents orders from customers outside the U.S.
Global Services second quarter revenue of $4.7bn and operating margin of 18.0 percent reflect higher commercial volume and favorable mix.
During the quarter, Global Services announced expansion in Poland with a new parts distribution site, collaboration with CAE to enhance and expand training solutions and Japan Airlines adopted Boeing Insight Accelerator for its 787 fleet.
Additional Financial Information
The increase in loss from Other unallocated items and eliminations was primarily driven by deferred compensation expense. Other income primarily reflects an increase in investment income due to higher interest rates. The second quarter effective tax rate primarily reflects the tax benefit on pre-tax losses including cumulative adjustments related to a projected increase in the valuation allowance.
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:
Core Operating Earnings/(loss), Core Operating Margin and Core Earnings/(loss) Per Share
Core operating earnings/(loss) is defined as GAAP earnings from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the Financial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core operating margin is defined as core operating earnings/(loss) expressed as a percentage of revenue. Core earnings/(loss) per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings/(loss), core operating margin and core earnings/(loss) per share for purposes of evaluating and forecasting underlying business performance. Management believes these core measures provide investors additional insights into operational performance as they exclude non-service pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts.
Free Cash Flow
Free cash flow is GAAP operating cash flow reduced by capital expenditures for property, plant and equipment. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity.
25 Jul 23. RTX Reports Q2 2023 Results. RTX sales up 12 percent on growth across all segments; Guides higher on 2023 sales, tightens adjusted EPS* outlook and revises cash outlook; Agreement reached to divest Collins’ actuation and flight control business
Second quarter 2023
- Sales of $18.3bn, up 12 percent versus prior year including 13 percent organic growth*
- GAAP EPS from continuing operations of $0.90, up 2 percent versus prior year, which included $0.39 of acquisition accounting adjustments and net significant and/or non-recurring charges
- Adjusted EPS* of $1.29, up 11 percent versus prior year
- Operating cash flow from continuing operations of $719m; Free cash flow* of $193m
- Company backlog of $185 bn; including $73bn of defense and $112bn of commercial
- Realized $70m of incremental RTX gross cost synergies; achieving previous $1.5bn target
- Repurchased $596m of RTX shares
Updates outlook for full year 2023
- Sales of $73.0 – $74.0bn, up from $72.0 – $73.0bn
- Adjusted EPS* of $4.95 – $5.05, up from $4.90 – $5.05
- Free cash flow* of approximately $4.3bn, down from approximately $4.8bn
- Confirms share repurchase of $3.0bn of RTX shares
“Accelerating demand in global commercial aerospace and strong defense spending allowed us to deliver 12 percent sales growth and increased operating profit year-over-year, with top-line growth across all RTX business units,” said RTX Chairman and CEO Greg Hayes. “Based on the strong performance year-to-date and strong end-markets, we are raising our full year sales outlook and tightening our adjusted EPS* outlook. However, we are lowering our free cash flow* outlook to reflect the impact of an issue that has recently come to light, which will require Pratt & Whitney to remove certain engines from service for inspection earlier than expected. The continued safe operation of our fleet will always remain our number one priority.”
Second quarter 2023
RTX reported second quarter sales of $18.3bn, up 12 percent over the prior year. GAAP EPS from continuing operations of $0.90 was up 2 percent versus the prior year and included $0.39 of acquisition accounting adjustments and net significant and/or non-recurring charges. This included $0.26 of acquisition accounting adjustments, an $0.08 charge related to an airline customer insolvency, $0.04 of restructuring and $0.01 related to segment and portfolio transformation costs. Adjusted EPS* of $1.29 was up 11 percent versus the prior year.
The company recorded net income from continuing operations attributable to common shareowners in the second quarter of $1.3bn, up 2 percent versus the prior year, which included $568m of acquisition accounting adjustments and net significant and/or non-recurring charges. Adjusted net income* was $1.9bn, up 10 percent versus prior year. Operating cash flow from continuing operations in the second quarter was $719m. Capital expenditures were $526m, resulting in free cash flow* of $193m.
Pratt & Whitney Fleet Update
Unrelated to the company’s second quarter earnings results, Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts will require accelerated fleet inspection. This does not impact engines currently being produced.
As a result, the business anticipates that a significant portion of the PW1100G-JM engine fleet, which powers the A320neo, will require accelerated removals and inspections within the next nine to twelve months, including approximately 200 accelerated removals by mid-September of this year. The business is working to minimize operational impacts and support its customers. Management will provide additional detail on this matter during the earnings call.
Summary Financial Results – Continuing Operations Attributable to Common ShareoBacklog and Bookings
Backlog at the end of the second quarter was $185bn, of which $112bn was from commercial aerospace and $73bn was from defense.
Notable defense bookings during the quarter included:
- $2.0bn for F135 production at Pratt & Whitney
- $1.5bn for F117 sustainment at Pratt & Whitney
- $1.2bn for AMRAAM production at Raytheon Missiles & Defense (RMD)
- $1.1bn of classified bookings at Raytheon Intelligence & Space (RIS)
- $322m for a diverse set of cyber defense services for federal and civil customers at RIS
- $294m of classified bookings at RMD
- $265m for Javelin production at RMD
- $251m for AIM-9X production at RMD
- $237m for CLEAVAR counter UAS production at RMD
The company’s reportable segments are Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space (RIS), and Raytheon Missiles & Defense (RMD). Future quarters will reflect the business unit realignment.
Collins Aerospace had second quarter 2023 sales of $5,850m, up 17 percent versus the prior year. The increase in sales was driven by a 29 percent increase in commercial aftermarket, a 14 percent increase in commercial OE, and a 5 percent increase in military. The increase in commercial sales was driven primarily by strong demand across commercial aerospace end markets, which resulted in higher flight hours and higher OE production rates. The increase in military sales was driven primarily by higher development volume.
Collins Aerospace recorded operating profit of $821m, up 50 percent versus the prior year. The increase in operating profit was primarily driven by higher sales volume and favorable mix, partially offset by higher production costs, as well as higher R&D and SG&A expenses. On an adjusted basis, operating profit* of $837m was up 36 percent versus the prior year. Q2 2022 included a charge of $69m associated with the disposition of two non-core businesses.
Pratt & Whitney
Pratt & Whitney had second quarter 2023 sales of $5,701m, up 15 percent versus the prior year. The increase in sales was driven by a 26 percent increase in commercial aftermarket and a 22 percent increase in commercial OE, which was partially offset by a 3 percent decrease in military sales. The increase in commercial sales was primarily due to
higher engine deliveries and favorable mix across both Large Commercial Engines and Pratt & Whitney Canada. The decline in military sales was driven by the absence of the benefit of an F135 production contract award in Q2 2022, which was partially offset by higher F135 sustainment volume in Q2 2023.
Pratt & Whitney recorded operating profit of $230m, down 24 percent versus the prior year. Q2 2023 operating profit included the impact of a charge related to a customer insolvency of $181m. Excluding the impact of the customer insolvency, and other significant and/or non-recurring items, Pratt & Whitney recorded adjusted operating profit* of $436m in the second quarter of 2023, up 44 percent versus the prior year. The increase in operating profit was primarily driven by drop through on higher commercial aftermarket sales and favorable large commercial OE mix, which partially offset higher production costs and higher R&D expenses.
Raytheon Intelligence & Space
RIS had second quarter 2023 sales of $3,655m, up 2 percent versus the prior year driven by higher sales from Sensing and Effects and Cyber and Services programs, which was partially offset by lower sales from Command, Control and Communications programs.
RIS recorded operating profit of $291 m, down 8 percent versus the prior year. The decrease in operating profit was driven by unfavorable mix and higher operating expenses, which more than offset improved productivity and drop through on higher volume. On an adjusted basis, operating profit* was down 6 percent versus the prior year.
Raytheon Missiles & Defense
RMD had second quarter 2023 sales of $4,000m, up 12 percent versus prior year. The increase in sales was primarily driven by higher volume in Air Power, Advanced Technology and Land Warfare & Air Defense programs.
RMD recorded operating profit of $415m, up 19 percent versus the prior year. The increase in operating profit was driven by favorable net program efficiencies and drop through on higher volume, which was partially offset by unfavorable mix resulting from early stage production programs. RMD recorded adjusted operating profit* of $427 m, up 23 percent versus the prior year. (Source: PR Newswire)
26 Jul 23. €20m B funding round propels Leaf Space towards goal of seamless satellite connectivity. Thanks to new capital raised, the company lays the foundation for continuing its development in the satellite sector. Leaf Space SpA (‘Leaf Space’), a leading global provider of ground segment services for satellite operators, today announced that it has successfully completed a capital increase for a total of €20m ($22m) on top of the availability by the European Investment Bank of a loan for a further €15m through Venture Debt.
Launched in 2014, the Italian-headquartered company based in Lomazzo (Como) currently supports around 80 satellites and achieved for the first time this March more than 10,000 successful satellite passes during a single month. Since 2020, it has seen a three-fold year-over-year increase in core business revenue and significant growth in capacity demand.
The round was subscribed by lead investors CDP Venture Capital Sgr (through Fondo Evoluzione) and Neva Sgr, alongside SIMEST and Digital Transition Fund – part of the CDP S.p.A. group. SIMEST has also carried out its first operation through the Single Venture Capital Fund, the new direct investment tool dedicated to the internationalization of Italian start-ups and SMEs. The existing shareholders RedSeed Ventures, Primo Space, and Whysol Investments, all subscribed to the capital increase and contributed to the new funding round, which builds on the success of a previous initiative three years ago. Furthermore, the European Investment Bank (EIB) has committed an additional €15 m in Venture Debt to the Company, and the transaction is in its finalization stage.
“The €20m of secured funding from new and existing equity investors add up to the €15m venture debt provided by the European Investment Bank, although to be fully finalized, and underscore the confidence in Leaf Space’s capabilities and the company’s potential for continued growth,” said Jonata Puglia, Leaf Space CEO and co- founder. “It further validates our success and market position as the second largest Ground Segment-as-a-Service (GSaaS) operator in the world”.
“This funding will enable us to further expand our global network of ground stations as well as add several new locations worldwide. We also plan to support new frequencies for remote sensing satellites, continue simplifying the user experience of our services, hire new talent to scale up our activities, and proactively work on new segments of the market and special projects with customers and partners”.
Giovanni Pandolfi Bortoletto, CSO & co-founder, said: “Within the next 10 years, we want to empower a future where spacecraft – regardless of their mission, application, orbit or deep space destination – are seamlessly serviceable and integrated to a plug-and-play (PnP) connectivity service. We are progressing towards efficient, fully automated, and ubiquitous communications with satellites, which will facilitate the ongoing and sustainable expansion of the space ecosystem.
In this context, Leaf Space facilitates such communications with space infrastructures through its automatic scheduler – the proprietary algorithm on which Network Cloud Engine and a distributed antenna network are based – and lays the foundation for new ones not possible yet today”.
Leaf Space’s ground segment services are essential for managing satellite communications, data downlink and uplink operations for satellite operators globally. The company’s advanced software solutions, combined with its network of ground stations and expert team, have made it a trusted partner in the satellite industry.
CDP Venture-Fondo Evoluzione
“Leaf Space’s first-of-its-kind Network Cloud Engine is revolutionizing the satellite communications industry and has the potential to bring about a disruption to the industry comparable to the shift from manual to automatic switching in telephone exchanges. With a growing market and volume of data and satellite information, transferring them efficiently and conveniently will be increasingly important”, says Mario Scuderi, Head of the Evolution Fund and helped in the investment by Federico Clementi and Lorenzo Alibrandi.
“As Neva SGR, we are excited to be part of Leaf Space’s journey and contribute to their continued success in revolutionizing satellite communications. We congratulate Leaf Space on this milestone and look forward to witnessing their advancements in the industry. Neva continues to invest in Italian excellence and in a sector, such as aerospace, which is central to Italian economy.” explains Mario Costantini, Chief Executive Officer and General Manager of Neva SGR.
“We invested in Leaf Space when it was no more than a project on a blank sheet, and we are proud to see it increasingly becoming an Italian excellence in the world in a strategic sector such as aerospace”, says Elisa Schembari, President of RedSeed Ventures and former President of Leaf Space.
“I am very enthusiastic about this important round, which makes it one of the most financed Italian startups. For us at RedSeed, this is a further validation that our investment selection methodology works on very early-stage companies as was Leaf Space in 2016 when we were the only ones willing to invest in Jonata’s and Giovanni’s idea of making ground segment services accessible to the smallsat market at lower costs”, adds Roberto Zanco, CEO of RedSeed Ventures.
“As early investors, we are proud to see Leaf Space grow and consolidate their business even further. Leaf Space is bringing a significant contribution to the satellite industry with their services tailored to the needs of smallsat operators. The new services addressing high-growth space segments will be key to further strengthening their position in the GSaaS market.” comments Giorgio Minola, General Partner at Primo Space and Primomiglio SGR.7
25 Jul 23. Iridium Announces Second-Quarter 2023 Results; Reports Record Operational EBITDA. Iridium Communications Inc. (Nasdaq: IRDM) (“Iridium”), a leading provider of global voice and data satellite communications, today reported financial results for the second quarter of 2023 and reiterated its full-year 2023 outlook. Net loss was $30.7m, or $0.24 per diluted share, for the second quarter of 2023, as compared to net income of $4.6m, or $0.04 per diluted share, for the second quarter of 2022. Operational EBITDA (“OEBITDA”)(1) for the second quarter was $115.8m, as compared to $105.9m for the prior-year period, representing a year-over-year increase of 9%. The net loss was primarily the result of the write-off of Iridium’s remaining ground spare satellite following the successful launch of five of its six ground spare satellites in May. This charge offset the benefits of strong revenue growth in Iridium’s Commercial Service lines and an increase in Engineering and Support revenue.
Iridium reported second-quarter total revenue of $193.1m, which consisted of $145.1m of service revenue and $48.0m of revenue related to equipment sales and engineering and support projects. Total revenue increased 10% versus the comparable period of 2022, while service revenue grew 9% from the year-ago period. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, was 75% of total revenue for the second quarter of 2023.
The Company ended the quarter with 2,140,000 total billable subscribers, which compares to 1,875,000 for the year-ago period and is up from 2,051,000 for the quarter ended March 31, 2023. Total billable subscribers grew 14% year-over-year, driven by growth in commercial IoT.
“We had another great quarter of double-digit growth in subscribers and commercial service revenue, which drove record operational EBITDA,” said Matt Desch, CEO, Iridium. Desch added, “Iridium’s strong cash flow continues to support ongoing business investment and the return of capital to our shareholders.”
Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium’s business, representing 61% of the Company’s total revenue during the second quarter. The Company’s commercial customer base is diverse and includes markets such as maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation and emergency services. These customers rely on Iridium’s products and services as critical to their daily operations and integral to their communications and business infrastructure.
- Commercial service revenue was $118.6m, up 12% from last year’s comparable period due to broad-based growth across all revenue lines.
- Commercial voice and data: Revenue was $55.0m, up 13% from the year-ago period. Subscribers grew 3% from the year-ago period to 405,000. Average revenue per user (“ARPU”) was $46 during the second quarter, compared to $42 in the prior-year period, due to higher access fees.
- Commercial IoT data: Revenue was $34.6m, up 13% from the year-ago period. Subscribers grew 19% from the year-ago period to 1,578,000 customers, driven by continued growth in consumer personal communications devices. ARPU was $7.48 in the second quarter, compared to $7.96 in last year’s comparable period. The decrease in ARPU resulted primarily from shifting mix of subscribers using lower ARPU plans, including personal communications subscribers.
- Commercial broadband: Revenue was $14.0m, up 16% from $12.1m in the year-ago period on increasing activations of Iridium Certus® broadband service. ARPU was $296 during the second quarter, compared to $292 in last year’s comparable period, reflecting an increasing mix of broadband subscribers using Iridium Certus.
- Iridium’s commercial business ended the quarter with 1,999,000 billable subscribers, which compares to 1,731,000 for the prior-year quarter and is up from 1,912,000 for the quarter ended March 31, 2023. IoT data subscribers represented 79% of billable commercial subscribers at the end of the quarter, an increase from 76% at the end of the prior-year period.
- Hosted payload and other data service revenue remained consistent at $15.1m in the second quarter compared to the year-ago period.
Service – U.S. Government
Iridium’s voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated.
Under Iridium’s Enhanced Mobile Satellite Services contract (the “EMSS Contract”), a seven-year, $738.5m fixed-price airtime contract with the U.S. Space Force signed in September 2019, Iridium provides specified satellite airtime services, including unlimited global standard and secure voice, paging, fax, Short Burst Data®, Iridium Burst®, RUDICS and Distributed Tactical Communications System services for an unlimited number of Department of Defense and other federal government subscribers. Iridium also provides maintenance and support work for the U.S. government’s dedicated Iridium gateway under two other contracts with the U.S. Space Force. Iridium Certus airtime services are not included under these contracts and may be procured separately for an additional fee.
- Government service revenue remained flat at $26.5m in the second quarter, reflecting the contractual rate in the EMSS Contract.
- Iridium’s U.S. government business ended the quarter with 141,000 subscribers, which compares to 144,000 for the prior-year quarter and 139,000 for the quarter ended March 31, 2023. Government voice and data subscribers decreased 3% from the year-ago period to 60,000 as of June 30, 2023. Government IoT data subscribers decreased 1% year-over-year and represented 57% of government subscribers at quarter-end.
- Equipment revenue was $27.4m in the second quarter, down 19% compared to $33.8m in the prior-year quarter.
- For full year 2023, the Company expects equipment sales in line with 2022’s record level.
Engineering & Support
- Engineering and support revenue was $20.6m during the second quarter, compared to $8.3m in the prior-year quarter, due to a rise in both government and commercial activity.
- The Company expects Engineering and Support revenue in 2023 to be higher than 2022 primarily due to the full year impact of the Space Development Agency contract, which was granted in mid-2022.
Capital expenditures were $22.4m for the second quarter, including $1.3m in capitalized interest. In May, Iridium successfully launched five of its remaining ground spares to enhance the redundancy of its global satellite network. Capital expenditures associated with this launch were less than $40m, including about $6.0m in the second quarter. The Company ended the second quarter with gross debt of $1.5bn and a cash and cash equivalents balance of $103.5m, for a net debt balance of $1.4bn, representing net leverage of 3.1 times OEBITDA.
Iridium paid its second dividend of $0.13 per common share on June 30, 2023. Dividends through the second quarter of 2023 have resulted in $32.7m in payments to stockholders.
During the quarter, the Company repurchased approximately 1.1m shares of its common stock under its previously announced share repurchase program at a total purchase price of $66.1m. As of June 30, 2023, $60.4m remained available and authorized for repurchase under this program through December 31, 2023.
The Company reiterated its full-year 2023 outlook:
- Total service revenue growth between 9% and 11% for full-year 2023. Total service revenue for 2022 was $534.7m.
- Full-year 2023 OEBITDA between $455m and $465 m. OEBITDA for 2022 was $424.0m.
- Negligible cash taxes in 2023. Cash taxes are expected to be negligible through approximately 2024.
- Net leverage of between 2.5 and 3.5 times OEBITDA at the end of 2023, assuming the completion of the Company’s total $600.0 m share repurchase authorization and the payment of four quarters of dividends. Net leverage was 3.2 times OEBITDA at December 31, 2022. (Source: PR Newswire)
24 Jul 23. Kromek’s 44% revenue boost underlines why it’s a buy.
This technology company has returned to cash profitability and is set fair to deliver strong growth
Second half cash profit of £2.6m on revenue of £10.5m
- Full-year gross margin improves from 46.8 to 51.6 per cent
- Annual cash loss reduced from £1.2m to £1m
- £7.4mn net proceeds raised in placing and open offer post year-end
- Bank refinancing likely to be completed shortly
Sedgefield-based Kromek (KMK:5p), a radiation detection technology company focused on the medical imaging and nuclear markets, has delivered a step change in cash profitability in the second half of its financial year to 30 April 2023, a move that looks sustainable.
Buoyed by record performances across both its nuclear and medical imaging segments, which increased their revenue contribution by 38 per cent to £7.4m and 65 per cent to £7.6m, respectively, Kromek’s annual revenue surged by 44 per cent to £17.3m. Moreover, the strong recovery in second half gross margin (59 per cent compared to 40.3 per cent in first half) combined with an improved sales performance delivered second half cash profit of £1.6mn on revenue of £10.5m, reversing a first half cash loss of £2.6m on revenue of £6.8m.
Analysts at both Equity Development and joint house broker FinnCap expect Kromek to deliver a cash profit of £0.9m on 21 per cent higher revenue of £21m in the new financial year, forecasts underpinned by structural drivers and an order book that already covers 60 per cent of their revenue estimates.
Structural growth drivers
Kromek is working with nine original equipment manufacturers (OEM) that are looking to develop cadmium zinc telluride (CZT)-based detectors in their advanced computed tomography (CT) and single-photon emission CT (SPECT)-based medical imaging scanners.
CZT detection solutions offer superior sensitivity, higher energy resolution and better imaging performance capabilities that enable the earlier detection of diseases, such as cancer, thereby improving patient outcomes. As the only independent developer and producer of CZT-based detection systems, Kromek’s technology has significant strategic value to OEMs operating in the medical imaging space.
Three months ago, a top tier OEM signed a seven-year collaboration agreement for the supply of CT and SPECT CZT-based detectors in its medical imaging scanners (‘Analysts think this stock will quadruple’, 19 April 2023). Kromek has also signed an agreement with Analogic Corporation, a second-tier supplier, to develop next-generation CZT-based detector solutions for photon counting computed tomography (PCCT) applications in the medical imaging and security sectors. In addition, the order book includes $40m (£31m) of contracted revenue over the next five years from Spectrum Dynamics and a $1.4m initial order placed post period-end by a new Asia-based OEM customer for CZT-based detectors in its SPECT systems.
Interestingly, chief executive Dr Arnab Basu highlights the market growth opportunity for Kromek in China where an ageing population and fast growing middle income population are increasing demand for diagnostic imaging. Last year, the country accounted for around 60 per cent of all new CT imaging systems in 2022.
Current geopolitical instabilities are playing into Kromek’s hands, too, underpinning demand for its dirty bomb’ detectors which protect buildings and critical infrastructure against nuclear threat. Last month the division won a $1.5m contract in Asia, having won two contracts worth £1.5m from European customers and $2.8m orders from US customers in the 2023 financial year. The expansion of Kromek’s distribution agreement with Smiths Detection Inc in the Middle East, Asia and Australia, is another positive step, widening the group’s geographic footprint for its products. The cutting edge technology is also being used to develop and supply government funded biological threat detection systems in both the US and UK.
Balance sheet strengthened
Kromek’s financial position is healthier, too. Importantly, Basu says the group is close to completing an enlarged debt facility with a new funder to replace the existing one with HSBC (expires on 31 August). The balance sheet has also been bolstered by £7.4m net proceeds from a placing and open offer in May 2023.
It’s worth noting that proforma net debt of £0.4m includes £2.8m of convertible loan notes, the majority of which are held by existing shareholders and could be converted into equity in early 2024. Equity Development forecasts £3mn cash inflow from operations in the new financial year which will make a major dent on £5.2m of budgeted capitalised research and development expenditure.
So, although Kromek’s share price has drifted since my last article, the investment case remains firmly intact. The potential upside to FinnCap’s 21p to 31p sum-of-the-parts valuation and Equity Development’s 26p fair value makes the shares a buy. (Source: Investors Chronicle)
26 Jul 23. French company Thales to buy US Imperva in deal worth $3.6bn. French defence electronics and cybersecurity company. Thales (TCFP.PA) said on Tuesday it had agreed to buy U.S. cybersecurity company Imperva in a deal worth $3.6bn on an enterprise value basis.
Thales, which will be buying Imperva from software investor company Thoma Bravo, said the acquisition would result in a boost to its earnings and would add around $500m of revenues.
“The acquisition of Imperva marks a major milestone in Thales’ cybersecurity strategy,” said Thales Chief Executive and Chairman Patrice Caine.
Thales estimated that buying Imperva would generate around $110m of pre-tax run-rate synergies, including $50m of cost synergies and $60m linked to revenue synergies. (Source: Reuters)
25 Jul 23. IFS delivers 38% YoY revenue growth with sharp rise in demand for its AI capabilities. IFS, the global cloud enterprise software company, today announced its financial results for the first half of 2023 ending June 30th, with annual recurring revenue up a significant 55 percent year on year, cloud revenue up 55 percent and software revenue up 44 percent representing a 79 percent share of total revenue.
Despite the continued challenges posed by high inflation and monetary policy tightening, companies are further investing in technology. That said, with cloud, Virtual Reality (VR), Robotic Process Automation (RPA) and IoT technology capabilities now seen as staple, the AI capability which IFS brings, embedded, natively to its customers is becoming a significant differentiator. This was confirmed in a recent IDC Info Brief* that indicated that capabilities that improve employee and asset productivity, build business resilience, and deliver faster time to value are more likely to secure the CFO’s share of wallet.
The IFS roadmap remains firmly aligned to these trends with technology that accelerates intelligent insights and automation and optimises people and assets. With AI well established throughout its automation, prediction, and optimisation capabilities the company has seen a sharp increase in demand in H1 by both existing and new customers. As the new generation of AI matures, the company is set to accelerate innovation in this area and continue to deliver these capabilities in every new release.
Adding to the company’s H1 success, in June, IFS acquired Poka, extending its capabilities with connected worker technology to empower factory and field workers to work smarter, safer and drive productivity and efficiency. Poka’s customer base includes global brands such as Nestlé, Tetra Pak, Mars, Bosch and RioTinto. The acquisition positions IFS as the only vendor with leading ERP, EAM and FSM capabilities now able to digitally connect workers across the end-to-end value chain.
During his five years tenure at IFS, CEO Darren Roos’ north star has been to deliver what customers asked for. From exponentially growing the ecosystem to provide choice, to successfully integrating multiple acquisitions to add new capabilities. In that time, the company’s also completed its own transformation and shifted its products and services business model to now being fully subscription-based. The company’s H1 results show the dividends of this focus, with consistently high renewal rates across its products and services, combined with a notable increase in new customers.
IFS CEO Darren Roos commented: “These results are the culmination of five years of hard work in establishing our business as a thought leader and as a partner that has the agility to respond to the needs of its customers. Roos added: “We have consistently been able to adapt faster to market dynamics than much larger competitors. Our 37 percent, five-year ARR CAGR, is a validation of our customer intimacy and focus.” He concluded: “I am proud of the ongoing commitment from our employees and partners and of the trust customers have shown us. The success of our organic and inorganic growth strategies is evidenced by our results and by our rankings as leaders year after year by customers and analysts.”
IFS Chief Financial Officer, Matthias Heiden, commented: “The ongoing macro-economic challenges mean companies are thinking carefully about their technology investments and focus on what will help build business resilience. We see this reflected in the number of customers moving to IFS Cloud and in how customers are prioritising when and where they extend their IFS footprint”. Heiden continued: “With annual recurring revenue up 55 percent year on year, software revenue up 44 percent Year on Year and our success services up 68 percent year on year, our H1 results are signals of a robust outlook.” Heiden concluded: “The traction we have seen in the U.S. in the first half of the year points to solid market penetration and that the value IFS is delivering is resonating.”
Through its software and success services, IFS is making it possible for customers to buy and consume technology in the way that creates the most value for them, so they can deliver amazing Moments of Service™.
* Shaping the future of Manufacturing, see the IDC info brief here.
Financial* and Operational Highlights for H1 FY2023:
- H1 FY2023 software revenue was EUR 392m, an increase of 44 percent versus H1 2022
- H1 FY2023 recurring revenue was EUR 373m, an increase of 49 percent versus H1 2022
- H1 FY2023 cloud revenue increased 55 percent versus H1 2022
- H1 FY2023 total revenue was EUR 493m, an increase of 38 percent versus H1 2022
*Note: all figures based in Euros and reported in constant currency.
In line with WorkWave establishing itself as a standalone business at the end of Q2 2021, the performance reported above excludes WorkWave’s contribution to the IFS Group.
- IFS has added multiple new logos across all its core industries, with wins such as Havfram, Bang & Bonsomer, Felker Brothers, Behlen and Apex Clean Energy
- IFS was named a Leader in the Nucleus Research Enterprise ERP Technology Value Matrix, 2023
- IFS ranked #1 in a Gartner report for 2022 Global EAM Market Share by Revenue for the second consecutive year
24 Jul 23. Hexcel Reports 2023 Second Quarter Results.
- Q2 2023 GAAP diluted EPS of $0.50 compared to Q2 2022 GAAP diluted EPS of $0.53.
- Q2 2023 adjusted diluted EPS of $0.50, compared to Q2 2022 adjusted diluted EPS of $0.33.
- Q2 2023 Sales were $454m, an increase of 15.6% over Q2 2022 sales of $393m (14.7% increase in constant currency).
- FY 2023 sales guidance revised to $1.765bn to $1.835bn, previously $1.725bn to $1.825bn. Adjusted EPS revised to $1.80 to $1.94, previously $1.70 to $1.90.
Hexcel Corporation (NYSE: HXL) today reported second quarter 2023 results including net sales of $454m and adjusted diluted EPS of $0.50 per share.
Chairman, CEO and President Nick Stanage said, “Hexcel’s second quarter demonstrated strong execution and delivered a 16% year-over-year increase in sales and a more than 50% increase in adjusted earnings per share. Global demand for our lightweight composite materials, delivering sustainable solutions continues to be robust, and our focus remains on staying agile and aligned with our customers to meet their requirements, as well as collaborating on next-generation innovations. Based on our confidence for the remainder of the year, we are now raising our guidance for Sales and Adjusted EPS.”
Mr. Stanage continued, “During May we completed our Morocco engineered products facility expansion that doubled our capacity to support the growing demand for lightweight composite engineered core in the region. We also made the strategic decision to acquire the site in Amesbury near Boston, Massachusetts, that is home to our highly specialized engineered products business acquired in 2019, thus ensuring our flexibility as we grow and expand that business going forward. Hexcel is well-positioned globally to support the expected production rate ramps of our customers as well as to pursue the significant secular growth opportunities for lightweight composite solutions.”
Sales in the second quarter of 2023 were $454.3m compared to $393.0m in the second quarter of 2022.
- Commercial Aerospace sales of $264.3m for the second quarter of 2023 increased 16.1% (15.4% in constant currency) compared to the second quarter of 2022. The sales growth was led by the Airbus A350 and Boeing 787 programs. Other Commercial Aerospace increased 13.3% for the second quarter of 2023 compared to the second quarter of 2022 reflecting growth in business jets.
Space & Defense
- Space & Defense sales of $137.5m increased 22.9% (22.1% in constant currency) for the quarter as compared to the second quarter of 2022. Growth was broad-based including fighter aircraft, particularly the F-35 and Rafale, as well as the Black Hawk, civilian helicopters and space programs.
- Total Industrial sales of $52.5m in the second quarter of 2023 decreased 1.9% (3.3% in constant currency) compared to the second quarter of 2022 as lower wind energy and recreation sales were only partially offset by growth in automotive and other industrial sales.
Gross margin for the second quarter of 2023 was 24.4% compared to 22.8% in the second quarter of 2022, increasing on higher sales volume leverage. As a percentage of sales, selling, general and administrative and R&T expenses for the second quarter of 2023 were 10.8% compared to 11.4% for the second quarter of 2022. Adjusted operating income in the second quarter of 2023 was $61.8 m or 13.6% of sales, compared to $44.7m, or 11.4% of sales in 2022. Other operating income for the second quarter of 2022 included a pre-tax net gain of $19.4m from a property sale in California. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 30 basis points in the second quarter of 2023 compared to the second quarter of 2022.
Year-to-Date 2023 Results
Sales for the first six months of 2023 were $912.0m compared to $783.6m, a 16.4% increase from the same period in 2022.
Commercial Aerospace (60% of YTD sales)
- Commercial Aerospace sales of $548.8m increased 22.9% (22.5% in constant currency) for the first six months of 2023 compared to the first six months of 2022. The A350 and A320neo programs as well as the 787 program drove the growth. Other Commercial Aerospace increased 18.4% for the first six months of 2023 compared to the same period in 2022 on expanding business jet demand.
Space & Defense (29% of YTD sales)
- Space & Defense sales of $263.7m increased 14.6% (14.7% in constant currency) for the first six months of 2023 as compared to the first six months of 2022. Areas of growth included military aircraft, including the Rafale and A400M, and both civil and military rotorcraft, led by the Black Hawk.
Industrial (11% of YTD sales)
- Total Industrial sales of $99.5m in the first six months of 2023 decreased 7.0% (6.1% in constant currency) compared to the first six months of 2022 as lower wind energy sales were only partially offset by growth in automotive and other industrial markets.
Gross margin for the first six months of 2023 was 26.2% compared to 22.5% in the prior year period, benefitting from higher sales volume leverage. As a percentage of sales, selling, general and administrative and R&T expenses for the first six months of 2023 were 12.5% compared to 12.8% for the first six months of 2022, with a number of development projects leading to the R&T cost step-up. Adjusted operating income for the first six months of 2023 was $124.8 m or 13.7% of sales, compared to $75.8 m or 9.7% of sales in 2022. Other operating expense for the first six months of 2023 included restructuring costs. Other operating income for the first six months of 2022 included a pre-tax net gain of $19.4 m from a property sale in California, partially offset by restructuring costs. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 50 basis points in the first six months of 2023 compared to the first six months of 2022.
Cash and other
- Net cash provided by operating activities in the first six months of 2023 was $30.1m, compared to $18.3m for the first six months of 2022. Working capital was a cash use of $113.9m for the first six months of 2023 and a use of $95.1m for the comparable period in 2022, increasing to support sales growth. Capital expenditures on a cash basis were $74.8 m for the first six months of 2023 including approximately $38 m for the purchase of the land and building at the Hexcel Amesbury, Massachusetts facility to support future growth. Capital expenditures for the first six months of 2022 were $37.9m. Net cash used for investing activities for the six months ended June 30, 2022 included the net proceeds of $21.2 m received from the sale of the California facility. Net cash used for financing activities for the first six months of 2023 included $2.5 m of financing fees associated with our new credit agreement that was entered into in April 2023. Free cash flow was ($44.7)m in the first six months of 2023, which includes the Massachusetts property purchase. This compares to ($19.6)m in the first six months of 2022. Free cash flow is defined as cash generated from operating activities less cash paid for capital expenditures. Capital expenditures on an accrual basis were $70.5m and $28.3m for the first six months of 2023 and 2022, respectively.
- The Company did not repurchase any common stock during the second quarter of 2023. The remaining authorization under the share repurchase program at June 30, 2023, was $217m.
- As announced today, the Board of Directors declared a quarterly dividend of $0.125 per share payable to stockholders of record as of August 4, 2023, with a payment date of August 11, 2023.
- Sales of $1.765bn to $1.835bn (previously $1.725bn to $1.825bn)
- Adjusted diluted earnings per share of $1.80 to $1.94 (previously $1.70 to $1.90)
- Free cash flow of greater than $110m (previously greater than $140m)
- Accrual basis capital expenditures of approximately $130m (previously approximately $90m)
- Underlying annual effective tax rate is estimated to be 23% (unchanged)
(Source: BUSINESS WIRE)
25 Jul 23. Quickstep back in profit on drone, maintenance work. Aerospace composites manufacturer Quickstep moved back into the black in the fourth quarter FY23 as the company continued to recover from operational and supply chain issues that hit the global industry in FY22.
The Sydney company told investors that it had experienced favourable outcomes in all three areas of its business leading to the positive Q4, and a ‘positive profit outlook for FY24’.
The company was awarded $264m in new orders and order commitments in FY23, delivering a record order book for the year ahead.
New airline customer commitments delivered in the aftermarket business are expected to support a significant improvement in profitability for the group.
The applied composites business booked extensive contracts to manufacture components and complete drone aircraft and is emerging as a Tier 1 supplier in the drone market.
Quickstep recently announced Wichita, Kansas as the location of its first US engineering and manufacturing facility, and also could be expected to benefit from component orders following a Defence decision to order 20 C-130J Hercules transport aircraft from Lockheed Martin.
The company released unaudited figures which showed group revenue of $94.4m in FY23, a nine percent increase on the prior year.
The performance was driven by a six percent rise in the company’s aerostructures business as well as uplifts in the aftermarket and applied composites sectors.
Quickstep recorded a net loss of $3.9m for the year
The company told investors: “The more stable operating environment which was achieved in Q4 FY23 saw record sales delivered and a return to profitability for the company.
“Strong customer demand remains a positive indicator into FY24 and with an ongoing focus on productivity we believe the business will continue its recovery.” (Source: Google/https://www.aumanufacturing.com.au/)
24 Jul 23. Booz Allen Agrees to Pay $377.45m to Settle False Claims Act Allegations. The U.S. Department of Justice (DOJ) has announced that Booz Allen Hamilton Holding Corporation has agreed to pay the United States $377,453,150 to resolve allegations that it violated the False Claims Act by improperly billing commercial and international costs to its government contracts. Booz Allen, which is headquartered in McLean, Virginia, provides a range of management, consulting, and engineering services to the government, as well as commercial and international customers. Under government contracting rules, there must be a nexus between the costs charged to a government contract and the objective of the contract. Thus, a contractor may charge to a government contract costs directly related to that contract, as well as indirect costs that benefit multiple contracts including the government contract. A contractor may not charge costs to a government contract, however, that have no relationship to that contract. This prohibition prevents government contractors from using taxpayer funds to subsidize non-government-related work. The settlement resolves allegations that from approximately 2011 to 2021, Booz Allen improperly charged costs to its government contracts and subcontracts that instead should have been billed to its commercial and international contracts. In particular, the government alleged that Booz Allen improperly allocated indirect costs associated with its commercial and international business to its government contracts and subcontracts that either had no relationship to those contracts and subcontracts or were allocated to those contracts and subcontracts in disproportionate amounts. The government further alleged that Booz Allen failed to disclose to the government the methods by which it accounted for costs supporting its commercial and international businesses. As a result, Booz Allen obtained reimbursement from the government for the costs of commercial activities that provided no benefit to the United States. The settlement resolved a lawsuit filed under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the Government’s recovery. The qui tam lawsuit was filed by Sarah Feinberg, a former Booz Allen employee, and is captioned United States ex rel. Feinberg, v. Booz Allen Hamilton, Inc., Civ. A. No. 16-1911 (D.D.C.). Ms. Feinberg will receive $69,828,832 in connection with the settlement. (Source: glstrade.com)
13 Jul 23. Pearson Engineering looks to the future with Armstrong Works investments including more than £5m of new manufacturing equipment. The North East’s industrial capacity has received a significant boost with a host of investments at Armstrong Works announced by Pearson Engineering. The investments, which include site improvements, new jobs and more than £5,000,000 of new manufacturing equipment in daughter company, Responsive Engineering, demonstrates the company’s commitment to the North East and to the future of UK manufacturing capability.
The investments will not only play a leading role in the delivery of critical equipment across most of the UK’s armoured vehicle programmes, but they will also serve a growing number of civilian markets such as rail, renewables, and construction.
In a show of confidence in future programmes, Responsive Engineering’s manufacturing potential will be boosted by a new press brake, with a maximum bending force of 800 tonnes. The investment enhances the companies’ already proven armour manufacturing capability, allowing heavy armour plate to be shaped and formed without the need for welding. This retains the blast and ballistic integrity of the material, increasing survivability for operators.
In addition, the company has commissioned the manufacture of a new gantry milling machine, which will be one of the largest in Europe. The machine will be able to achieve the highest tolerances on major fabrications, up to 11m in length. This investment builds on Responsive Engineering’s already impressive machining capability.
“These equipment investments will help us to deliver projects to our customers of an even greater scale and complexity. They allow us to take on projects that have not previously been possible, but for which we have significant expertise and experience within our workforce. We are working hard to introduce new people to the business to take this incredible capability into the future, and to contribute towards the prosperity of our region.” Rachel Mansfield, Managing Director at Responsive Engineering
Both companies are investing in the future of their workforce with the recruitment of craftsmen, apprentices, graduates, and senior professionals. An initiative to enhance links with local colleges will be announced this year to further support Responsive Engineering’s talent pipeline, training students in manufacturing skills for some of the world’s most critical industries. The establishment of this future manufacturing academy will build upon the companies’ commitment to developing the next generation of skilled professionals and supports its ESG strategy, which also prioritises support to veterans and service leavers. In the last six months, a host of staff initiatives have also been rolled out, including a new healthcare plan and community activities.
Investment in the Armstrong Works building itself will ensure that both companies can continue to support customers effectively, efficiently, and safely. Further initiatives to improve the environmental sustainability of the site include the introduction of a cross-company Environment Action Group to find iterative improvements to everyday operations, as well as research into the electrification of our products, to reduce their long-lasting environmental impact. Armstrong Works, originally built in 1847, has served armed forces in the UK and around the world and continues to make a significant contribution to defence programmes today.
“Investment in improvements to the historic Armstrong Works readies the site for the future and helps us to deliver against our commitment to our customers, across a wide range of sectors. Our customers, whether they are in defence, rail or energy require the highest levels of manufacturing capability, quality, and skill. We are proud of our continued commitment to investing in both our people and manufacturing capabilities, which also creates exciting and varied opportunities at both Pearson Engineering and Responsive Engineering, for generations to come.” Craig Priday, Managing Director at Pearson Engineering
15 Jul 23. HawkEye 360 receives millions in Series D-1 funding. HawkEye 360 Inc. has closed $58m in new funding which will be used to develop new space systems and expand analytics that support high-value defense missions.
This Series D-1 round was led by funds and accounts managed by BlackRock (NYSE: BLK) with additional funding provided by Manhattan Venture Partners and existing investors that include Insight Partners, NightDragon, Strategic Development Fund (SDF), Razor’s Edge, Alumni Ventures, and Adage Capital.
HawkEye 360 has 21 satellites on-orbit and plans to move to a new Block 3 satellite architecture, starting with Cluster 14 and beyond. The company is also investing further in artificial intelligence (AI), data fusion, and multi-intelligence orchestration to better extract value from the large amount of RF data being collected. The goal is to simplify analysis for customers.
WilmerHale acted as legal counsel for HawkEye 360 in connection with the transaction. Goodwin Proctor LLP acted as legal counsel for BlackRock in connection with the transaction.
“HawkEye 360 has disrupted what used to be a static defense intelligence domain. The company is the quintessential example of how a commercial operation could service the intelligence needs of the U.S. and our allies. They have built a growing market with government customers and are proof that private-sector innovation and leadership will help enable peace through strength, deter future conflict, and ensure global stability.” — Jared Carmel, Managing Partner and General Partner, Manhattan Venture Partners
“HawkEye 360 continues to make the world a safer place through advanced RF analytics – including addressing maritime, environmental, and national security needs,” said. “We’ve learned much over the past four years delivering data to the most demanding customers in the world. We’ll use this funding to drive our next steps in innovation. It speaks volumes that these leading investment firms are confident in the future of RF geospatial intelligence as a critical defense technology.” — John Serafini, CEO, HawkEye 360 CEO
“We invest in first-class startups that have proven innovative technology, where we can come alongside to accelerate their growth. Governments and commercial customers are asking for better intelligence and, with its full chain of control from orbit to analytics, Hawkeye 360 is leading the way for this new category of RF space-based data.” — Matt Singer, Managing Director, BlackRock (Source: Satnews)
24 Jul 23. Kromek (AIM: KMK), a leading developer of radiation and bio-detection technology solutions for the advanced imaging and CBRN detection segments, announces its final results for the year ended 30 April 2023.
- Revenue increased 44% to £17.3m (2022: £12.1m)
- Gross margin improved to 51.6% (2022: 46.7%). Improvement largely due to sale mix and easing of supply chain challenges
- Adjusted EBITDA loss reduced to £1.0m (2022: £1.2m loss)* and positive for H2
- Loss before tax was £7.3m (2022: £6.1m loss)
- Cash and cash equivalents at 30 April 2023 were £1.1m (30 April 2022: £5.1m). Fundraise of £8m (gross) post year end
*A reconciliation of adjusted EBITDA can be found in the Financial Review.
- Strong revenue growth with delivery under component supply agreements; secured new milestone contracts; and end products launched into the market
- Significant progress in medical imaging:
o Signed a landmark 7-year collaboration agreement with a tier 1 OEM to provide CZT-based detectors for use in the customer’s advanced medical imaging scanners
o Entered a collaboration agreement with Analogic Corporation (“Analogic”) to develop CZT-based detectors for photon counting computed tomography (“CT”) applications in medical imaging and security screening
o Launch by Spectrum Dynamics Medical (“Spectrum Dynamics”) of the world’s first digital single-photon emission computed tomography (“SPECT”)/CT scanner for higher energy imaging, which uses Kromek’s CZT technology
o Received repeat orders totalling over $2.0m for the supply of detectors for bone mineral densitometry (“BMD”) and SPECT applications and the gamma probes market
o Awarded £2.5m from Innovate UK for two programmes to further develop a low dose molecular breast imaging technology based on Kromek’s CZT-based detectors
o Further contract win of $1.4m post year end from a new Asia-based OEM customer for CZT-based detectors to be used in the customer’s SPECT systems
- Record revenue in nuclear security, with the winning and delivery of new and repeat orders, including:
o A $1.3m contract from a US customer for the D3M and two orders totalling $1.5m from US government customers for the D3S-ID
o Two contracts, totalling £1.5m, for D3M and D3S-based product products for European government end-users
- Established distribution partnership with Smiths Detection for the distribution of the Group’s nuclear security products to North and South American markets, the Middle East and certain key markets in Asia and Australasia
- Post year end, awarded a $1.5m contract in Asia for a new product in the civil nuclear market
Biological Threat Detection
- Concluded long-running programme with the Defense Advanced Research Projects Agency to develop a biological-threat detection solution
- Received a £4.9m contract from a UK government department for a three-year programme to deliver bio-security solutions
Manufacturing and IP
- Significant progress in improving yield and cost efficiency in CZT crystal growth and detector manufacturing
- Nine new patents were filed and four were granted during the year
Dr Arnab Basu, CEO of Kromek, said: “We are pleased to have delivered record revenues, with significant growth in advanced imaging and CBRN detection, and achieved positive adjusted EBITDA for the second half. During the year, we experienced our highest levels of customer engagement, with some of this transitioning to major agreements that are great endorsements of our offering as well as demonstrations of our strategy coming to fruition. Accordingly, we ended the year strongly, with enhanced foundations for future growth. We entered the 2024 financial year with a much-strengthened balance sheet and heightened commercial momentum – winning new orders in addition to a growing and substantial opportunity funnel. Accordingly, we anticipate a strong year-on-year increase in revenue and we remain on track to be adjusted EBITDA positive for the full year. This growth will be based on both of our segments, with demand continuing to be underpinned by macro-economic and market conditions. In advanced imaging, there is increasing widespread need for the early and accurate medical diagnosis facilitated by our CZT-based products. In CBRN, global insecurity and raised concern over potential nuclear threats continue to underscore the requirement for products such as ours in this sector. Consequently, the Board looks to the future with confidence.”
TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.